Retail Banking Industry Grapples with Core Systems

Legacy core applications are expensive to maintain and the information in them is often trapped in proprietary, hard-to-access data silos. Working with Sun and its Sun Partners, customers worldwide are already reaping benefits by implementing solutions optimized for the Solaris Operating Environment.

No company is an island in today's always open financial markets, and open markets require open systems. Yet legacy core systems present an obstacle to financial services organizations that are trying to reduce costs and efficiently manage transactions; deliver high levels of customer service; deliver new services through multiple channels; and increase profits in their competitive, global markets.

With the industry moving toward global, open standards such as Internet-based communications, XML, and Java-technology-based applications, retail banking companies will need to avoid being further locked into legacy core systems. They need to focus on general issues such as eliminating redundancy, sharing information more quickly and accurately, and cutting the cost and complexity of application and system maintenance.

Core systems—hardware, software, and services—receive more than one-fourth of the worldwide retail banking industry's technology budgets, according to a recent TowerGroup report. Yet legacy core applications are expensive to maintain. Furthermore, the information in them is often trapped in proprietary data silos that are hard to access and even more difficult (and expensive) to integrate, thus making it difficult to offer dynamic new services through multiple delivery channels.

The Core Banking Initiative

In order to meet these industry challenges, Sun Microsystems has developed and continues to enhance a core banking initiative that expands the company's well-known expertise in capital markets to the retail banking industry. The Sun Core Banking Initiative has many dimensions for meeting the multiple challenges faced by the retail banking industry. It includes solutions from Sun's Partner community, a Retail Banking Architecture developed with Infosys, the Mainframe Rehosting solution, and the Enterprise Continuity solution.

Sun Partner Community

Working with Sun and its Sun Partners, including ISVs EPL, Flex Solutions, InfoSys, Kirchman, Sanchez, and System Access, customers worldwide are already reaping benefits by implementing solutions optimized for the Solaris Operating Environment. Some of these companies include the BF Goodrich Credit Union, the Kern Schools Federal Credit Union, eBank Systems, Financial Data Solutions, the Hanvit Bank (the largest private bank in South Korea), and ICICI (the largest bank in India). Among them, the Kern Schools Federal Credit Union reports a significantly lower total cost of ownership since implementing the Sun and EPL iPower solution. ICICI is delivering personalized, Internet banking services to its customers.

Other companies are receiving similar benefits as they keep pace with a quickly moving industry. They are aware of the challenges they face: an ongoing and increasing need for delivering services to their customers through multiple channels, keeping track of all activities within a unified customer view, and being more efficient 24x7 and worldwide.

Sun and Infosys Retail Reference Architecture

This architecture offers a low-risk path for migration needs, offers banks a platform to keep pace with changing customer needs, and enables them to differentiate their products and services from those of their competitors. This architecture also provides a unified view across channels and helps banks reduce cycle times and operational costs.

This architecture is already reaping benefits for the Union Bank of India. V. K. Khanna, the bank's general manager, Department of Information Technology, notes that the Sun and Infosys solution "is a tested and proven platform," adding that it "meets our aggressive growth plans and provides the required business agility to meet the challenges of today's volatile banking environment."

Mainframe Rehosting

Sun's Mainframe Rehosting software helps customers run existing mainframe CICS, COBOL, and other batch processing applications with minimal modification. Removing the time, inefficiency, and cost associated with maintaining legacy mainframes is an obvious advantage of moving toward an open computing environment, and Sun's approach is to focus on deeper cost savings, tighter security, and greater functionality for customers who are moving from a mainframe to Sun servers.

This transition is paying off for The Landrum Company, a Missouri-based bank holding company, which has moved away from its mainframe and achieved the benefits mentioned earlier with the enhanced rehosting solution. End-of-day updates happen 30 percent faster, which saves labor costs, according to Jim Stock, CIO and senior VP of Landrum. Furthermore, the company has been able to move from a proprietary system to an open, UNIX platform-based system with which it internally manages systems issues that its hardware vendor previously handled at a significant additional cost.

Enterprise Continuity

Sun's Enterprise Continuity solution provides long-distance, real-time data continuance by integrating technology from Nortel Networks. The solution addresses industry concerns about information management, security, and business continuance.

Retail banks have to continue conducting business under all conditions, even in times of disaster. This mission-critical issue also involves ROI as companies calculate the costs of restarting applications and using manual restore procedures versus investing in solutions that prevent downtime.

Multiple data centers act as a single, unified center in the Sun and Nortel solution. Data is quickly and automatically routed to alternative sites—located far enough apart to be protected in a disaster—should one site go down. System availability is maintained during disasters, obviating the need for data and application recovery.

The Move to Open Systems

Legacy core systems are a fact of life in the retail banking industry. Yet Sun customers are finding that reference architectures, partner solutions, and initiatives that take an open systems approach are leading the drive to more efficiencies and cost reductions, new revenue streams, and higher customer satisfaction. Whether they are migrating from legacy systems and applications, rehosting applications, delivering products and services in real-time through multiple channels, or ensuring that their systems will continue to operate at full strength during a crisis, retail banking companies can optimally tackle these problems through an open systems approach.

Additional Information:

More on Sun and Infosys Solution

Sun's Retail Banking Reference Architecture

"Sun Follows the Money Trail," Internet News

TowerGroup estimates that retail banking core systems receive more than one-fourth of the banking industry technology budget.

Sun Rolls Out Architecture for Retail Banking, eWEEK

For more information about Sun in the financial services community, go to www.sun.com/finance

TowerGroup estimates that retail banking core systems receive more than one-fourth of the banking industry technology budget.

Sun Rolls Out Architecture for Retail Banking, eWEEK