PNC Turns to BIAN Standards To Evolve Its Core Banking Systems

February 2, 2015

The PNC Financial Services Group, which grew out of the 1982 merger of Pittsburgh National Corporation and Provident National Corporation and several small and large acquisitions since, is one of the nation’s largest diversified financial services organizations with assets of $320 billion.

It is participating in BIAN, an international organization developing standards for banking technology vendors and some of the world’s largest banks, to create a framework which would allow banks to plug and play components from different vendors. Such a framework would help banks avoid vendor lock-in and provide a bank protection against a vendor which simply stops updating its technology.

PNC, which has a domain-specific IT strategy, runs its deposit system on Hogan, which  it will shut down – sunset – while offering a migration path to a system of BIAN compatible components. ”¨”¨“Although there are some rumors they will breathe additional life into it,”said Steve Van Wyk, CIO and COO at PNC. There are mixed message coming from the company.

He knows the bank will eventually have to move to a new core system, which is a reason PNC has joined BIAN.

Because American banks were early adopters of computers, they run on some of the oldest architecture in the world of banking, systems that run overnight to process transactions and are badly mismatched in the world of instantaneous results that users expect from mobile banking applications.

PNC with 2,700 branches, 6.6 million checking customers, and 7,400 ATMs, was confronting growing costs related to maintainability of its complex core banking systems. It had challenges in time to market with innovation and with modernization of its application portfolio.

The size and complexity of a large bank makes maintaining a legacy system almost as dreadful as replacing it. Installing a new core can take several years and cost from $300 million to more than $1 billion; it’s not a decision banks take lightly.

Working with IBM, PNC undertook a study of its systems and the value of BIAN. A whitepaper they produced explained the problem:

“Traditionally, banks (and other types of firms) have used an application-centric approach to developing IT solutions to business problems. This has resulted in a very large number of IT applications, each supporting some subset of business functions, sometimes overlapping…The only feasible approach is to adopt an incremental, progressive approach to transformation.”

Van Wyk is looking to BIAN as a way to turn sectors of PNC’s core banking system into components that will allow a controlled approach to transformation.