Running Ahead of the Pack

Technology alone cannot provide competitive advantage, at least not for long. To continue to realize the benefits that technology can offer, banks must formulate an enterprisewide strategy, continually monitor systems performance, explore emerging technologies and integrate new solutions with existing platforms. Complacency precludes progress.

San Francisco-based Union Bank of California ($47 billion in assets) isn't resting on its achievements. After a year in which the bank increased its focus on enterprise monitoring and performance and improved its disaster recovery abilities, UBOC plans to move ahead with a number of additional technology initiatives in 2005 to improve its competitive position, according to Chip Hernandez, the bank's chief technology officer. Among its planned projects, the bank will focus on server consolidation, enabling an IP network and leveraging image capture capabilites.

Before the bank's 2004 efforts, UBOC monitored systems at the infrastructure and application levels, Hernandez says, but the bank initiated a wholesale review of its existing technology and the additional benefits the financial institution could gain with new technology investments.

"We identified systems to keep, systems to eliminate and systems to add," explains Hernandez. "The result was an enterprise vision backed up by an architectural framework. The benefit will be a near real-time ability to not only detect problems but also be able to more rapidly assess root cause and remediation approach, which ultimately translates to greater customer support," he says.

As part of its enterprise vision, UBOC implemented a direct matrix architecture (DMX) data storage solution from Hopkinton, Mass.-based EMC to improve its processing and disaster recovery preparedness. According to Hernandez, the bank realized 30 percent improvements in capacity and performance, as well as reductions in costs.

Building Through Consolidation

To maintain the momentum, Union Bank of California plans to reengineer its server environment and update its current network, according to Hernandez. "In 2005, we are aggressively pursuing server consolidation," he says. "We recently committed to IBM's P5 processor-based 595 server line. We are excited about this technology because of what it provides in the way of capacity, virtualization capabilities and performance. A total of 91 older servers will be replaced by 16 Power5 processor-based servers, while improving the processing throughput by a factor of four." The bank will enjoy a 43 percent reduction in floor space, a 46 percent reduction in power consumption and a 63 percent reduction in maintenance costs as a result of server consolidation, Hernandez adds.

Additionally, the technology department is updating its network to wring more value out of existing systems, Hernandez says. "We will initiate the refresh of our network," he continues. "This will start with our core and end with our branches. In the final tally, we want to end up delivering net-new value rather than simply replacing equipment."

UBOC hopes the revitalized network will help branches control costs, while delivering business value, Hernandez says. "We intend to fully enable an IP network that will provide a basis to improve operating efficiencies; increase market share, wallet share and customer profitability; gain new revenue opportunities; and improve customer service and retention," he relates. "The solutions to achieve these results will be reflected in our ability to provide virtual contact centers, IP telephony, video, IP ATMs and kiosks, and wireless customer concierge."

Clearing the Way for Check 21

Union Bank of California also is leveraging technology to take advantage of Check 21. The bank will invest in imaging technology to capture checks earlier in the process, according to Hernandez. "Our check clearing back office definitely will have to increase the use of technology in order to realize the benefits of Check 21 legislation," he says. "Technology will enable Day 1 capture requirements that will then initiate the electronic flow of check items."

The bank will invest in a decentralized model of Check 21 clearing, a process that Hernandez say results in more efficient image capture. "The decentralized model likely will be determined by a business case that will justify capture at the point of presentment or capture at a remote site," he says.

Hernandez predicts that technology investments surrounding Check 21 will increase industrywide as more banks seek to take advantage of the legislation. "I think you will see Check 21 momentum grow as more and more banks deploy solutions in an effort to realize the benefits of Check 21 - expense reduction, competitive advantage, retrieval capability and customer service," he says.

Hernandez says that the bank also is considering ways to leverage other emerging technologies, including Linux. "We have deployed Linux but limited to utility functions," Hernandez says. "We will continue to track progress in the larger marketplace."

In addition, UBOC will keep an eye on content addressed storage (CAS) technologies. CAS solutions eliminate the need for applications to understand and manage the physical location of information in storage media; the addresses that are created for content are specific so applications can use the addresses to find stored documents or content. "You are going to see more and more deployment of content addressed storage solutions," Hernandez says. "We are deploying one such solution to help us manage a wealth of fixed content, for example, with e-mail statements."

The storage solution will help the bank in many areas, including issues of compliance, according to Hernandez. "We are encouraged by the promise of this technology because it will enable us to more efficiently manage a large and growing amount of fixed content," he says. "This efficiency not only extends to internal and external product enhancements but also will reflect an easier ability to conform to compliance and regulatory requirements."