SOA in Core Banking May '13 -Christopher S
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Transcript of SOA in Core Banking May '13 -Christopher S
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SOA in Core Banking May '13
- Christopher S
Abstract: Nowadays there are huge discussions on different software architecture approaches, and the most well-known one is Service Oriented Architecture (SOA). Existence of legacy applications as unwieldy weapons impact the technologies in a way that integration frameworks had been in the battle of consumers. A seismic architecture and technology in some businesses elevated sense of urgency; one of these businesses is core banking. Core banking is dissipating hence using service orientation in related applications is not a choice.
Why SOA?
Gartner has evaluated the competitive landscape of core banking vendors that service the future of the international retail banking market. Gartner’s evaluation has uncovered the leading strategies of these vendors/products, revealed their underlying product/service capabilities and
affirmed their relevance to the changing conditions of the banking industry [REF-1]. Gartner has been concentrated on following items:
1. Research side: The evaluation began with 32 candidates for the International Retail Core Banking (IRCB) Magic Quadrant for 2008 and
resulted in a qualified group of 22 combinations of vendors and products that represent the major movers in the retail core banking system market. This final group submitted information ranging from long-term strategies through to product road maps. Additionally,
Gartner conducted interviews with reference banks to resolve the placement of group finalists on the Magic Quadrant [REF-1]. 2. Core Banking System definition is a back-end system that processes daily banking transactions and posts updates to accounts and
other financial records. Core banking systems typically include deposit, loan and credit-processing capabilities, with interfaces to general
ledger systems and reporting tools. Gartner's IRCB Magic Quadrant assesses vendors on the multicurrency products they offer in support of a bank's financial transaction management in the retail banking market [REF-1].
3. The main challenge: Gaining access to customer information — a challenge with product-centric core solutions — is definitely a driver for adopting open, easily integrated core banking systems [REF-1].
4. Core Banking Road Map: The maturation of middleware messaging architectures and the evolutionary path to services and event-
driven constructs are leading to opportunities that will unlock the single-use logic in these line-of-business (LOB) solutions. Development techniques, such as service-oriented development, are focusing on creating components of fine and coarse granularity that may be
exposed to services. For example, a common interest accrual component is used across all front- and back-office applications to provide consistency and accuracy while extending reusability [REF-1].
And finally, and the reason of such road map is [REF-1]:
“These types of technology innovations are simplifying the maintenance and support of products while reducing the volatility commonly associated with the introduction of new products and services. Some core banking vendors already are progressing quickly to achieve componentization of their back-office offerings. Because changes in banking functionality haven't been market movers, many packaged core banking vendors have
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been afforded the opportunity to play catch-up with product functionalities that once served as differentiators in homegrown or highly customized solutions — especially in large bank markets. ”
Besides, by evaluating some of these vendor’s architectures, effortlessly you can find that the most of architectures are going to be close to service oriented architecture (SOA), as a proof of this idea following issues have been taken place.
Alnova Financial Solutions™ is Accenture's state-of-the-art custom banking solution. This cora banking platform covers all aspects of
universal banking; it handles traditional business products as well as products designed for wholesale banking and wealth management, all in an integrated, browser-based environment that crosses multiple delivery channels. Leveraging market-proven technology, this
scalable solution allows banks to achieve high performance today, and in the future. A three-tier technological banking platform, Alnova Financial Solutions is flexible, allowing clients to tailor it to their individual environments. Running on Mainframe, Unix and Microsoft .NET
platforms using the most widely known databases (DB2, Oracle, SQL Server, etc.), the architecture is designed to align with service-
oriented architecture (SOA) [REF-2] principles, including business processes and interoperability, service location transparency, and standards-based implementation via Web services.
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Infosys Technologies (Finacle): The solution has an integrated CRM module enabling banks to offer a rich and differentiated value proposition
to customers. The layered Service Oriented Architecture (SOA), STP capabilities, web-enabled technology and 24 X 7 operations ensure multi-channel, multi-country and multi-currency implementations. The functionality-rich modules in the solution provide banks with a varied palette of
features to continuously innovate on their product and service offerings. With Finacle core banking solution, banks can meet the challenges of
managing change, competition, compliance and customer demands effectively. [REF-3]
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FNIS (Core24): The component for reporting to customers makes it possible KORDOBA CORE24 enables banks to adjust their software
to their own strategies, helping them set themselves apart from the competition. An extensive range of user program interfaces and the
online parameterization mean it can be extended to suit the needs of individual customers without modifying the standard solution. By using the pervasive SOA services the connection to an existing middleware and orchestration of business processes is easily possible.
[REF-4] And overall in the following diagram you can find the segmentation of SOA investments [REF-5]:
Enabling SOA in core banking
If we want to enable service oriented architecture in a core banking atmosphere, we need to have methodology. The best and only the one methodology that can be found on SOA is called Methodology for Enabling Service Oriented Architecture (MESOA), which is pictured on following
image [REF-6]:
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The Process
Starting by SOA in banking should have be in a specific manner, the way that makes SOA more compatible into your bank is as same as following structure:
Business Vision Axis
1. Developing vision and mission
2. Developing strategies
3. Evaluating line of business and functional areas 4. Delineating key business requirement for each area of the business
Current State Axis
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1. Define business capabilities
2. Define technical capabilities
By having both axes right now you can have a gap among Current State Axis and Business Vision Axis, then the final map is:
Grouping gaps by plans
Design the roadmap and prioritize the plans
Develop detail requirements
Develop final RFP
In your strategic planning activities you should have following teams: project management, business team, and technology team.
Reference Architecture based on SOA
The Reference Architecture is a framework used as a single point of reference to illustrate the key operating elements of the core banking
solution. The reference architecture has following categories: technology, people, functions, processes, services, products, delivery channels, and customer segments.
Technology
As a technology part the following items are mandatory:
Information architecture
o Enterprise Service Bus
o Business Process Executive Language (BPEL) o Presentation
Enterprise web portal such as Liferay [REF-7]
Graphical User Interface (GUI) Other (voice, ATM, etc…)
Web Content Management (WCM) or document management, such as Alfresco [REF-8] Business Intelligence (BI) and reporting tool such as Pentaho
Core applications Collaboration tools
Core banking applications
Connectivity Middleware or Enterprise Application Integration (EAI)
Extract, Transform, and Load (ETL) tools
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Web services
Unified messaging Business Process Machine (BPM) or WS-HumanTasking
Business Rule Engine Management System (BRMS) Data
Data warehouse
OLTP OLAP
Data mining User data
Data classification Enterprise data model
Data Center
Servers Disaster Recovery Plan and backups
Data storage (SAN and NAS)
People
As a people part the following items are mandatory:
Recruiting and hiring
Training
Compensation and rewards
Career planning
Functions
As a function part the following items are mandatory:
Strategic planning
Information management
Customer segment management
Channel management
Product development
Asset management
Communications and public relations
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Finance
Human resources
Information technology
Legal
Marketing
Security
Sourcing and procurement
Processes
As a process part the following items are mandatory:
Opening and closing accounts
Deposits and withdrawals
Statement creation
Transfers
Cheque issuance
Account settlement and reconciliation
Clearing
Collections
Underwriting
Customer risk enquiry
Internal bank transactions
Debt and securities issuance
Payments processing
Anti Money Laundering (AML)
Services
As a service part the following items are mandatory:
Bill payments
Advisory services
Cheques
Cash management
Document and draft collections
Safety deposit box rental
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Capital markets
Trade finance
Foreign exchange services
Products
As a product part the following items are mandatory:
Current accounts
Non-interest savings accounts
Investment products
Loans
Credit cards
Foreign exchange accounts
Delivery Channels
As a delivery channel part the following items are mandatory:
Branch
Automatic Teller Machine (ATM)
Internet
Telephone
Kiosk
Point of sale (POS)
Customer Segments
As a customer segment part the following items are mandatory:
Retail individuals
Small and medium size businesses
Large corporate
Government
High net worth individuals
International individuals and businesses