Common architecture needed to reduce bank system integration costs

April 30, 2013

BIAN says that innovation is being held back with integration cost five times higher than software purchase

Banks need to adopt common architectures order to untangle the complex IT systems which are hindering innovation, according to industry standards group BIAN.

The use of legacy systems is causing a number of problems for banks, with highly complex environments built up over years blamed for the numerous high profile IT failures, such as the major Natwest outage last year.

In addition, the lack of interoperability between systems means that the cost of integrating new software into legacy infrastructure can devour large chunks of IT budgets, the majority of which is being spent on keeping the lights on rather than innovative projects.

The Banking Industry Architecture Network (BIAN) was set up in 2008 to address some of the problems faced in markets such as the UK, where there is a strong reliance on legacy systems.

The aim of the group is to establish a standard service oriented architecture for banks such as UBS, Credit Suisse and Deutsche Bank. Systems integrators and software vendors are also among the 38 members currently part of BIAN, including SAP, IBM and Temenos.

According to Hans Tesselaar, executive director of BIAN, banks will benefit from adopting a common architecture to integrate off the peg software from vendors, with the cost of implementing new software often dwarfing the outlay on the system itself.

“Hardly anyone is going to build their own software today, everyone wants to buy off the shelf,” he said. “If you want to integrate an off the shelf product into your existing IT landscape, and it could be a multi vendor environment including legacy systems, it costs you on average four to five times the price that you paid originally for the package.”

Tesselar adds that the prohibitive cost of integration can effectively stop new projects in their tracks.

“A lot of business cases to replace, renew or add functionality are killed due to integration costs. If you can get the integration cost down, then the business case is much more solid from day one. This gives the agility to the bank that they don’t have today.”

BIAN aims to make software integration easier by developing a common architectural framework to enable interoperability within banking systems, involving the production of consistent service domain definitions. BIAN has already defined 263 service domains as part of its reference model, and is continuously developing the definitions of each in its Service Landscape releases.