Q&A: ATB's Ken Casey Discusses End-to End Core Replacement Project

ATB Financial ($26.5 billion in assets) is in the midst of an end-to-end core system replacement that leverages the SAP for Banking software suite. Ken Casey, Calgary, Alberta-based bank ’s EVP of major initiatives, discusses the project with Bank Systems & Technology.

BS&T: What are the basic components of your core system replacement project, and how far along are you?

Casey: Ours is a complete end-to-end banking platform, so it is quite a bit broader than other [core systems projects]. We're replacing our entire transactional banking suite -- payments, analytics and the [general ledger], pretty much everything -- with an SOA-based architectural stack.

It's fairly complex, but we are nearing the end of the build phase. We'll go into a full integration test phase that, given the breadth of the program, will take a good seven to eight months. That takes us to a go live in early 2011.

BS&T: Why was now the right time to modernize? What are the drivers behind the project?

Casey: The drivers -- on a very strategic, shareholder or board level -- were risk of the aging environment causing a potential service disruption and also the potential information security [issues] that could arise with a fairly complex distributed environment of aging technology. The third driver from that point of view was compliance with the new regulatory regime. ...

From a management point of view, the driver was growth. It was the ability to be competitive in the marketplace with products and services that could be [developed] quickly and economically. With the older platform, that was increasingly difficult. At some point there would have been a cap on growth. On the employee level, the driver was usability and a focus on customer activities.

The reason now was a good time -- and we started before the recession [planning started four years ago and implementation began in 2008] -- was that the risks were significant enough that something had to be done and also that the next generation of banking technology made it viable. In the past, it was difficult to actually find a solution that could take us end to end.

BS&T: What were you looking for from vendor solutions that you found this time around?

Casey: It was the flexibility of the solutions. Many of the products could be built through parameters, rather than through code. In other words, it was the ability to create a product in a certain field, such as savings accounts, and then take that one product and, through configuration, create many. In our current environment and in many solutions over the years, that flexibility wasn't there. Much of what you built had to be built over again each time.

This flexibility ... helped us create new products economically and also quite distinctly. [We can develop] products aimed at certain segments of the population -- different demographic or economic groups. As the costs of product development are less, they can be much more targeted. What also factored in for us was the ability to build reusable services for our multiple channels.

BS&T: Are there things you know now that you wish you had known when you first started the project?

Casey: There always are. It is more complex than we had originally envisioned it to be -- the dependencies are higher. The building of services in the SOA stack -- the number of them and the number of channels -- is more complex than we thought.

The maturity of configuring products for the North American market is taking a little longer to do than originally thought. Most of these next-generation banking platforms have been implemented in Europe and in Asia, but we're one of the early adopters in the North American market. In some instances, there are different products with different characteristics [in North America] that really haven't been done before [on a core system such as this]. We're doing some of that for the first time, and I think we're doing an end-to-end integration for the first time as well.

BS&T: Who are your key tech partners on the core systems project?

Casey: We contract with SAP (Walldorf, Germany) and Accenture (Chicago). SAP is really the software provider and Accenture's role is about data migration for technology architecture, testing and program management. There also is in-house development, to the extent that when you're running a program that goes two-and-a-half to three years in duration, keeping the bank [running] is an important piece of that.

BS&T: What are some of the project's expected benefits?

Casey: On one hand, you're replacing infrastructure that is at the end of its life and you're replacing risk. On the other hand, there is an opportunity to drive benefits from the investment. Those hard cost benefits ranged from creating new products and new services for our customers for revenue growth in our lines of business to the reduction of back-office costs.

The total cost of ownership of our IT environment was another area where we found savings. So in our business case, we did manage to offset the costs [of the core banking implementation] over an eight- to 10-year period.