PNC Puts Industry Tech Blueprint to the Test

by Penny Crosman
Publication: American Banker
February 6, 2015

PNC says an industry-developed IT blueprint is helping it gradually modernize legacy core banking systems, streamline applications, improve time to market for innovative products, and prepare for cloud computing.

The Pittsburgh bank’s head of technology and operations, Steve Van Wyk, said the blueprint, which is called Banking Industry Architecture Network, could also help the entire industry become cloud-ready. (BIAN is also the name of the independent, member owned, not-for-profit association behind it.)

“There’s no way, in my view, we’re going to cloud-enable the banking industry without a standard that will make the different services you’re going to buy from the cloud interoperable,” said Van Wyk, who was formerly global chief operating officer for ING and is the chairman of BIAN. “The cloud is going to allow us to have options. The big, enterprise solutions are a thing of the past.” (By “cloud,” Van Wyk is not referring to public cloud offerings such as those from Amazon, Rackspace and Google. He means private, internal and hosted cloud services.)

BIAN has been under development for several years — it’s still under development — as has the underlying concept of services-oriented architecture. The IT services blueprint it’s creating offers a set of definitions of the basic software components that banks use. It further defines how those applications can be broken down into reusable pieces of code, or “services” that can be fit together into new applications, kind of like Lego blocks.

The blueprint is being written specifically for the banking industry by bank and vendor technologists.

It’s been slow to get implemented in real life — PNC is the first U.S. bank to report progress with BIAN deployment. (More than 50 banks worldwide are BIAN members.)

To onlookers, BIAN can seem abstract and theoretical. But Van Wyk said it goes well beyond theory.

“The framework provides various benefits when you get into the real-world application of how you move toward more reliability, security, agility and everything else that you’re expecting out of your platform,” he said.

Industry observers offer mixed views of BIAN’s practicality.

“I think BIAN is making good progress in moving from the theoretical to the practical,” said Mary Knox, research director at Gartner. “We are seeing banks and vendors using the BIAN landscape in guiding their own application architectures.”

BIAN has become more practical as it has detailed and published its services landscapes, worked with other standards organizations such as The Open Group and IFX, and released a “how-to” guide and educational efforts to promote adoption and share best practices, she said.

BIAN is useful for planning and design exercises like PNC’s, said Jost Hoppermann, vice president and principal analyst at Forrester Research.

“This is the practical aspect that already provides a high amount of value,” he said. Trying to create one set of standards for a large number of banks may prove challenging.

Hoppermann doesn’t see BIAN helping banks create or manage private clouds or even software-as-a-service applications, yet.

“Our survey data shows that the key obstacles for financial services-specific Saas deployments are still, for example, privacy and protection of business secrets on one side and broader availability of suitable financial services-specific SaaS offerings on the other,” Hoppermann said. “BIAN has many ingredients to create value in the SaaS space, but the key obstacles have to disappear before BIAN’s vision of ‘cloud-enabling the banking industry’ will become real.”

Knox is more hopeful.

“While BIAN by itself cannot perform cloud enablement, it has an important role to play,” she said. By creating standards at the services level, BIAN can promote interoperability across cloud environments with wider adoption, she said. This interoperability is important to lessen vendor lock-in, in that it improves the ability to port cloud services from one provider to another.

BIAN in Play at PNC
BIAN is enabling the $320 billion-asset PNC to provide a common technology language and taxonomy across the entire bank, across technologists and business partners, Van Wyk said.

“A lot of times when you’re a large bank like PNC and about to embark on a transformation, you know you have a journey ahead of you, rationalizing your environment and simplifying and bringing everybody onto the same page,” he said.

As at most larger banks, mergers over the years have left PNC with a complex web of core banking systems. These include Hogan, a CSC product that is being phased out. The legacy systems have been customized over the years and grow ever more expensive to maintain.

The BIAN framework will enable the bank to start evolving the core systems without a major overhaul, Van Wyk said.

“The big bang replacements of core platforms are just never going to work,” he said. “The integration costs and the complexity are just way too much.”

Moving core platforms into a componentized framework like BIAN’s “allows you to start chewing away at your transformation and doing it in logical sequences, aligned with the overall business strategy,” Van Wyk said. “Then over time you transform your entire core into a componentized framework that is broken down into services.”

And where multiple applications do the same thing, the BIAN framework is helping PNC pare down.

Having a BIAN-defined services-oriented architecture will make PNC more agile, he said.

“If you look at these big enterprise solutions, you know what the cost of integration is into those environments, and then you’re land-locked into one enterprise solution,” Van Wyk said. “You’re making changes all in the context of that enterprise solution. I see a world at some point where our individual BIAN services can be bought from whoever builds the best mousetrap, and it may not be SAP, Oracle or any of the existing players. It could be someone very innovative, looking at it in a completely different way. Now I can take it and plug it into my environment because it’s in compliance with the BIAN framework.” (SAP, for one, is making its products BIAN-compliant.)

Because the BIAN framework defines the way services work with one another, BIAN-compatible services should be able to coexist without having to be integrated, because they know how to communicate, Van Wyk said. With an IT environment completely in compliance with the BIAN framework, the bank should be able to easily move existing services and plug-and-play new ones.

Standardized Apps
Using BIAN, PNC is building new account opening and corporate lending software. The hope, naturally, is to make account opening and loan handling faster and easier.

“Any time you’re in there upgrading code, you’re bringing yourself up to what you consider to be best in class and best in the industry, and hopefully establishing a strategic advantage,” Van Wyk said. “Speed of account opening is always very important to us, to make that experience for our clients seamless and fast. It’s also very important to have your debit card available to you as you walk out of a branch.”

Help Choosing Vendors
BIAN is also helping PNC and other banks with vendor selection.

“PNC was looking to replace their payments engine, and when they started writing down all their requirements, they came up with hundreds,” said Hans Tesselaar, director of sourcing, innovation and governance at ING and executive director at BIAN.

During the years, the payments engine has grown and taken on activities it shouldn’t have, Tesselaar explained.

“They also saw it would be some type of mission impossible to make all the comparisons,” he said. The BIAN group reverse-engineered the payments application and identified all the BIAN business capabilities mentioned in the original request for information. They came up with nearly 50.

“Then we started discussing with the business, ‘if we look at those 40 or 50, can we agree which are the real payments capabilities? what does a payment engine do?’ Then they narrowed it down to 10,” Tesselaar said. “They agreed these 10 should be in payments and the rest should be somewhere else.” This helps refine the lens used for vendor selection.

PNC has no deadline for these projects.

“The beauty of it is the pace is at your disposal and in line with strategic priorities,” Van Wyk said. “In a big bank, I am not going to have to shut down everything else and be pressured to do it in a timeline that freezes the bank for an extended period of time, and I’m not rolling the dice hoping it’s all going to work. In the approach I’m talking about, I take the pace I want to, one that makes sense as far as the bank is concerned, and reduce the risk because I’m nibbling away on components that are critical to us.”

Industry Mandate?
Knox said she expects the BIAN framework will become standard in the banking industry.

“There is a need for standards at the services level that cut across services providers, vendor solutions, and in-house development to achieve agility and efficiency and promote models such as hybrid cloud and best-of-breed development,” she said. “There are no other viable competing standards initiatives at this level, and the inclusive nature of the BIAN organization — including banks and vendors, crossing multiple geographies — promotes networking and sharing of best practices across participants.”

Van Wyk also expects BIAN will be adopted by the financial services vendor community and ultimately by service providers that are going to cloud-enable the banking industry.

“There’s no way we’re going to move to a cloud environment at an enterprise software level,” he said. “Why would I cloud enable a whole enterprise system? What I want is to have service-level abstractions, so that I can buy the best service out there in the marketplace from whomever builds it, and then plug and play that into my environment.”