BIAN members discuss IT architecture challenges

November 11, 2013
Publication: Finance on Windows

BIAN members discuss IT architecture challenges The Banking Industry Architecture Network (BIAN), an independent not-for-profit association that defines banking
interoperability standards, released the latest instalment of its Service Landscape at this year’s Sibos event. Service Landscape 2.5 will help driveBIAN’s mission to support industry-wide adoption of service oriented architecture in order to cut banking technology costs.

Amber Stokes met with some of its members at Sibos to talk about the role BIAN is playing in the industry and how it is helping banks to tackle they key challenges they face.

Many people here at Sibos are discussing the top IT trends that are having an impact on the industry. What trend would you like to highlight?

Don Trotta, global head of Financial Services, SAP and vice chair of the BIAN Board: When we talk to banks, one of their top priorities is to more easily comply with regulations. This plays into what we’re trying to do at BIAN in terms of standardisation in the banking industry, which will allow banks to not only remain compliant, but also drive growth and customer centricity.

Ravi Pratap Singh, head of Global Product Management, Nucleus Software: Nucleus Software focuses on a niche market in loans management. For our customers it’s all about customer retention and loyalty. To better connect with consumers, loans management software providers have to integrate with banks’ multiple processes and systems.

Colin Kerr, Worldwide Industry Solutions manager, Microsoft: We are seeing something very similar. According to the Capgemini and Efma World Retail Banking Report 2013, 41 per cent of customers are not sure if they will stay with their bank after one year. And it wasn’t trust or fees that were the issue, but the quality of service and ease of use of banking channels. Banks are realising that they need to become more customer centric – and technology is the key enabler of that.

Jochen Schneider, chief operating officer of SunGard’s retail banking business and member of the BIAN board of directors: Recent SunGard research found that consumers expect mobile and internet banking channels to be user friendly while still offering a high level of functionality. This trend is applicable to the branch too. Branches need to embrace the latest technologies to offer a superior customer service.

Chae An, vice president and CTO Financial Sector Solutions, IBM and member of the BIAN board of directors: Banks are also focusing on providing a better service for their corporate clients. Key to this is having good analytics capabilities, which allows for improved cash flow forecasting and risk management, and the capacity to onboard clients quicker. This is not only better for the bank as they can collect revenue faster, but it’s also better for the client as they get transactions quicker.

What emerging industry trend will really take off in the next few years?

Trotta, SAP: I expect ‘as-a-service’ cloud models will be more commonly used. This relates to the main priorities I mentioned earlier in terms of effectively dealing with regulatory compliance. One way banks want to help manage their cost structure is to move away from Capex expenditure towards operating expenditures. Cloud consumption models will enable this.

Hans Tesselaar, executive director, BIAN: Cloud ‘pay as you go’ models are also opening up opportunities for smaller banks, particularly those in developing countries that don’t necessarily have the capital to invest in modern, enterprise-level IT upfront. These kinds of organisations will be more inclined to experiment with the cloud. Established banks will then follow suit once they see what’s possible.

Trotta, SAP: The success of cloud computing comes down to standardisation. Banks should start with a virtualisation initiative that allows them to get into the right position internally in the organisation, and then get to the point where they can move to a full cloud environment. BIAN is going to play an important role in making this possible.

Schneider, SunGard: Another trend we have witnessed is that many banks that have survived the financial crisis have purchased and acquired other banks to sustain growth. Therefore, having other IT systems that can be integrated in a modular way would be ideal, but they often don’t have that luxury. One option is for banks to move towards outsourcing models, but the bigger players will stay on their current systems and offer a cloud-based service on a bank-to bank basis instead.

How can BIAN help?

Trotta, SAP: BIAN provides the path by which banks can get away from spending huge amounts of money on integration to instead invest in innovation and address the kinds of challenges we’ve been talking about.

An, IBM: Banks might consider themselves to be unique, but a lot of what banks do is common. And this is what’s important about BIAN: by standardising the industry and also capturing some of the business merits and best use cases, banks can make use of this information so that they don’t have to invest in recreating what’s already there.

Schneider, SunGard: Traditionally, large banks develop all of their own systems based on a set of internal criteria. What we are doing in the BIAN network is connecting the best architects within the banks and software providers in order to come up with a common and flexible framework that banks must comply with.

An, IBM: The banking industry is rather like car manufacturing: there are 15 different models, but if you look behind the colours, you will see that 70/80 per cent of the parts are the same and they’re just assembled differently. BIAN creates a common foundation and semantic rules of how to build software components for banks that fit together.

Kerr, Microsoft: We, as software providers, find the same thing – there are common elements of an architecture that you need in order to build software solutions. It doesn’t make sense to compete on that; instead, organisations should share best practices and then differentiate on future functionality. And that’s what BIAN encourages.

How do you expect BIAN to develop?

Schneider, Sungard: As the industry evolves, software vendors need to deliver services and modules that fit into that landscape. We started this process earlier this year. We produced a new framework and imported the structure from BIAN to create a model to form our requirements, structure our existing software functionality and then produce new code for the framework.

Kerr, Microsoft: There are 40 companies right now involved in creating BIAN. There are thousands of vendors out there and tens of thousands of banks who are not involved. So
how do you encourage mass adoption? BIAN has made great progress in reaching new countries and new time zones, to the point where we now nearly have representation
across the globe. But how do you make that manifest itself into new solutions in those geographies? Education is crucial.