In order to be successful a service orientated architecture (SOA) needs a shared web services framework and common protocols to enable financial institutions to expose proprietary systems and share applications across their network. Tony Dennis investigates how close we are to this and if the 'shared chain' is anywhere near

A service orientated architecture is designed to be flexible enough to accommodate different business applications over time and to adapt to changing business needs. The IT infrastructure concept is becoming increasingly popular with banks, building societies and insurers because it allows individual IT system components to be replaced without affecting the rest of the system, thereby avoiding expensive enterprise-wide 'rip and replace' technology projects and redundant legacy silos. This means an expensive and time-consuming core banking IT replacement project, for example, could be undertaken gradually or a newly acquired subsidiary can be absorbed more easily. Is the concept working well in reality though and penetrating deeply into the financial services market or is it already viewed as just so much hype?

The challenge is for suppliers and industry alliances like the Banking Industry Architecture Network (BIAN), which consists of 23 vendor and bank members, including Deutsche Bank and Sungard amongst others [See boxout at end], to establish whether or not SOAs really can work; have tangible benefits; and aren't simply just more hot air. The aim of BIAN is to agree and promote common standards and shared protocols for SOAs to encourage uptake, although until it perhaps grows a little more it is debatable if it can achieve this.

Recent research sponsored by Sungard, and carried out by the consultancy arm of International Banking Systems (IBS), has shown an increased trend towards customer focus initiatives tied to risk and performance management. The study was conducted at the turn of the year with senior IT managers from retail banks across Europe. It claims a fundamental shift is underway back to what are described as the 'basics' of banking, namely traditional criteria like speed to market; marketing; transactions; cross-selling; profitability analysis and strong channel delivery. Significantly, the report found that many banks view the SOA concept and methodologies as key to meeting their aims, although interestingly it also said that many banks are still debating the extent to which SOAs can yet be usefully deployed.

Back-end systems must not constrain the adoption of new channels. It must be feasible to deliver customer relationship solutions without changing the underlying core systems," says Nicholas Brewer, vice president at Sungard's Ambit software business unit. "Correctly implemented SOA can do this. We offer our customers a componentised SOA approach, whereby banks can quickly deploy loan origination or deposit gathering, for example, across multiple core systems if so required."

BIAN There's considerable disagreement over the importance of joining BIAN. Most of the IBS report's respondents agreed that initiatives like it were needed but the debate is about whether this is the body to do it. After a period of uncertainty, BIAN provided concrete examples of its own SOA vision at Microsoft's Partner Conference 2009 (WPC09) in July. In effect, it released six documents designed to guide banks towards a SOA world. As BIAN's general secretary Oliver Kling explained: "We had a desire to go to market [with the documents] in order to get feedback." He described the six documents as a kind of SOA cookbook, outlining shared protocols that could encourage uptake. Kling also revealed that there could have been more than six guidelines but full agreement on others - such as a SOA approach to lending - weren't achieved in time for WPC09 [this has now been rectified and a lending document is now available as well: see boxout for all the guides]. The impetus was to get the guide standards out there and get feedback in order to perfect the offerings and build upon them in future, a process that is even now continuing.

While BIAN was established by financial institutions such as Credit Suisse, ING and Standard Bank and vendors like SAP, and therefore has a certain amount of credibility, it will always struggle for total acceptance while large players, like IBM and Oracle for instance, are missing from its membership. The insurance industry is also completely left out at the moment. Although BIAN's members are working hard to share technical expertise and develop common SOA standards for banking, they are not officially a comprehensive over-arching authority for SOA and won't realistically be so unless everyone joins in. Still, as the saying goes, you have to start somewhere and it'll be interesting to see where the group goes.

Spencer Greene, CTO for financial services with Tibco Software, makes the counterargument against the group, pointing out that: "If you look at the vendors in BIAN, they are the ones that do not in my opinion have a strong SOA story (for instance, SPA & Microsoft); unlike the vendors that are not in BIAN, like IBM, and Oracle / Tibco."

"Groups that are created to push what purport to be industry standards seem to pop up all the time," he adds. "Frequently these groups have little beyond abstract ideals supported by heavy marketing and disappear as often as they appear."

Others have not joined BIAN because they say customers don't demand it. "Our customers are not hung up with a tick box approach," explains Dharmesh Mistry, CTO at edge IPK. "Instead they take a best of breed approach and come to us saying, 'As part of our SOA, you fit the requirements we need for our presentation layer' - that's enough." Significantly, Mistry estimates that some 90 per cent of his company's revenues come from financial institutions, with customers like Liverpool Victoria, so he says he knows what he's talking about.

Understanding SOA
As SOA is a concept rather than a concrete product, an approach to organising your IT, so it is frequently misunderstood. George Ravich, an executive vice president with Fundtech compares its rise to the introduction of the Apple iPod. "Before the iPod, music lovers had to accept songs in the order that they were presented on the CD or vinyl. Re-arranging those songs and mixing them with other tracks was time consuming and difficult," he explains. "In the past re-using single business processes was infeasible, leading to multiple versions of the same process being developed separately for different applications and channels. Now, with SOA, individual business processes can be discovered, modified and recombined dynamically without having to involve the IT department. Business users can create new composite services and re-use services outside of their original context."

To further complicate matters, there's another entrant in the acronym soup though - OPP or Open Presentation Platform. edge IPK's Mistry argues that, being an architecture, SOA is comprised of multiple layers and his company's product - edgeConnect - sits right at the top, on the presentation or GUI [Graphical User Interface] level. He argues that with OPP you get a single, consistent user interface that sits on top of any SOA offering. One of the traditional barriers to SOA adoption has been a concern that while the exposed front-end offerings are simplified the back-end environment could be complicated still further - not something that this can perhaps solve? Other barriers to adoption have been worries about ID authentication and security across multiple channels and cultural worries about developing systems across departmental boundaries, where the IT department isn't necessarily in charge anymore either. For all that the advantages of avoiding legacy systems means that people are pushing ahead anyway and crossing these bridges when they come to them.

Technology offerings
There's a big dispute over whether it's actually to possible put together and deliver SOA as a complete package. Oracle seems to think it's feasible. It has recently announced Oracle FlexCube Enterprise Limits and Collateral Management. As the product title suggests, however, this software is aimed at a specific task. Li-May Chew, an analyst with Financial Insights, claims that: "Oracle launching this SOA-based application can centralise exposure management across financial institutions' product offerings, and assist them in making better-informed credit decisions."

Not unsurprisingly, Susan Hauser, vice president for worldwide financial services with Microsoft, reveals that they too are working towards 'productising' SOA in a project which is codenamed Oslo. According to her, this will help Microsoft's customers to "realise their own vision of SOA. It's a multi-year, multi-product effect which takes advantage of the work we've done with BIAN." 'Hooks' for SOA have also been built into Windows.

While he admits that it is possible to build an end-to-end SOA using just one vendors' products, edge IPK's Mistry, unsurprisingly argues that using a SOA component like OPP offers institutions far greater depth of presentation than the normal packages on offer. "OPP provides much greater flexibility in the way an application is presented," he claims. As he points out a financial institution might have only six to eight mission critical applications but with around 80,000 staff, without OPP, training for each different app would present a significant burden.

Doubt has been cast on whether true SOA compliant systems currently exist. Fundtech's Ravich claims that his company offers the first complete set of 'domain-specific' services within an SOA framework, with its Global PayPlus offering. He admits, however, that SOA is currently "immature" and like other technologies - i.e. Java - it'll take time for the finance industry to fully embrace SOA.

Tim Hall, a director with HP, says if implementing a SOA is to be a success, it must deliver three things: risk reduction; cost reduction; and a faster time to market. The crux of SOA is that it is an approach rather than something concrete. It's a change of mindset too. With it, the objective is to stop re-inventing the wheel. This means telling IT developers to write little new code and re-use 'services', which others have already created. This goes against the grain with most developers, of course. But things will have to change if the connection is to be made between bold talk and a shared SOA heaven. Everyone's going to have to join the chain - mentally and practically.



Boxout - What is BIAN?
The Banking Industry Architecture Network is a not-for-profit organisation which specifically seeks to accelerate the adoption of Service Oriented Architecture (SOA) in the banking industry. It aims to do so by promoting convergence towards a common services landscape and semantic standards that will make it easier and more cost-effective to integrate such services. Its membership currently comprises of banks such as Credit Suisse and ING; service providers like Axon, CGI and IKOR Financials; plus software vendors like Microsoft and SAP. Indeed it grew out of SAP's SOA-oriented initiative - the Industry Value Network (IVN). To try and gain consensus for its definition of SOA services, IVN was turned into the independent body in April 2008 at a meeting in Frankfurt.

BIAN recently announced seven deliverables, most of which were unveiled at Microsoft's WPC09 event, which provide the following SOA standards documents for banks to follow should they so wish: Service Landscape; Metamodel; Service Repository; Service Lifecycle Management; Payment Agreement; Payment Execution; Clearing and Settlement.

Case study: SocGen
One bank which has implemented an SOA to streamline development and maintenance is Société Générale. Its previous architecture forced developers to duplicate data-gathering code in every application in the system. Under the new architecture functional components - or services - are reusable. The bank has replaced its legacy scheduling system for risk management with Tibco's BusinessWorks software. Different applications in the Risk Information System (batch and synchronous applications) can all connect to the data-gathering service and share the same functional logic. "Tibco provides SOA capabilities that enable shared access to business functions across applications," says Fabrice Beral, manager for the risk management project at Société Générale.

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