Publication: www.forbes.com
By Tom Groenfeldt
Moving to the cloud will allow banks to modernize their systems and connect to a variety of vendor solutions and other financial institutions by making use of standards from BIAN, the Banking Industry Architecture Network.
A recently released whitepaper developed by Microsoft and IBM explores how the BIAN Service Landscape may be used to define a comprehensive commercial blueprint for banking, a blueprint that could be used to ‘Cloud-enable’ the banking industry. BIAN has developed a framework of standards for defined business processes in banking.
Microsoft and IBM working together?
“As the eco system continues to evolve, you always have this co-opetition,”said Victor Dossey, industry technology strategist for banking at Microsoft. He thinks that BIAN offers new opportunities for interoperability where banks could eventually just plug in a new piece of software, either within the enterprise or in a cloud deployment.
“I believe the cloud gives us the ability to extend our enterprise.”Using the BIAN framework, banks can avoid creating the spaghetti code they created during their expansion of in-house COBOL programs, he added.
“Banks need to implement cloud as an extension of their enterprise in a standardized and rationalized fashion. The danger is to think of cloud as greenfield and we will fling spaghetti into it.”
Microsoft is an active participant in BIAN because as a big cloud provider it finds BIAN offers a way to implement new services quickly and build in agility, explained Dossey.
“I am always excited about BIAN because it is a place we come together and understand what is needed from a structure perspective and we can solve those problems. The working sessions have world class experts from around the world collaborating, and it is energizing. You feel what we are doing as an industry as a whole is helping the world move forward.”
Although these are still early days for the BIAN framework, its value shows in the number of organizations that are joining – membership is over 50 and includes leading banks and technology vendors, such as ABN AMRO, UBS, Credit Suisse and Deutsche Bank plus technology providers like IBM, Microsoft, SAP, Temenos and CSC. At the SWIFT Sibos conference, BIAN announced that FIS, Cognizant, Diasoft and Capgemini have joined.
The BIAN model will help banks develop their infrastructure without getting locked into a single vendor’s solution, said Hans Tesselaar, executive director at BIAN. While vendors now offer proprietary solutions, he expects that eventually they will move to more open solutions using standards like ISO 20022 and FIX which will permit banks to mix and match technology solutions using APIs.
Dossey said that banks will be able to expose systems as services so other systems can integrate financial services such as payments or credit tools. The framework will help connect systems within the enterprise and enterprise systems to the world outside the bank.
“To date the creation and adoption of SaaS solutions has been limited to easily isolated business tasks or to business activities where a common approach can be adopted with limited site-specific configuration,”according to a whitepaper that Dossey wrote with Santosh Kumaran, chief architect for financial services at IBM and Guy Rackham, BIAN lead architect.
BIAN builds on the concept that a bank can be modeled as a collection of capabilities such as payments, risk management, deposits and lending. The whitepaper, “Cloud-enabling the banking industry”, explains ”The BIAN model defines the complete array of all of the generic functional building blocks that can be assembled to make any bank….Instead of simply integrating selected virtual utilities within the internal application portfolio, banks can now consider Cloud based outsourcing (and perhaps in-sourcing) of whole aspects of their business operation to other banks, to non- banks seeking integrated access to financial services and to specialized solution providers.”
Banks already mix in-house and third party services. Private banks often outsource their back office to other banks, and banks rely on third party providers for customer credit ratings. In the future, the whitepaper suggests, banks and non-banks could consume financial services through the cloud, much as they might currently use a CRM service like Salesforce.com.
BIAN’s Tesselaar said that Asian banks have been particularly aggressive in looking at ways to use BIAN standards to expose services to other financial firms or corporations through APIs.
“It’s another way for banks to compete, not just by selling banking products but by selling integratable banking capabilities,”said Tesselaar. The cloud enables greater flexibility so banks can use an enterprise service bus to publish applications to other enterprises and provide plug and play exchange of business services. An Asian bank which is big in one country could offer services to other countries where it has minimal presence.
“I see increased openness with US banks,”said Tesselaar. “My personal experience is they are not as open in knowledge exchange as European and Asian banks, although Tier II banks are opening up because they are aware they cannot do it alone.
“BIAN offers a sensible blueprint for management and control structures,”added Tesselaar. “It doesn’t get into implementation of how things are done, so those competitive advantages such as pricing and differentiating features are not an issue. Most banks and customers are looking at it to simplify and provide business infrastructures in a low cost way, recognizing that differentiation happens outside the infrastructure, in people and pricing.”
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