Microsoft .NET Gathers Steam in Financial Services

Microsoft's next generation of architectural development tools, called .NET, are being adopted by a growing number of financial institutions, including brokers, banks and insurers, to communicate and share data over the Internet, regardless of computing platform, device or programming language. The tools allow information to be easily shared among personal computers, smart devices, applications and Web sites.

The .NET strategy, which was announced two years ago, is a pet project of Microsoft chairman Bill Gates.

"We're actually through the early years of this work, we're through the years of proving the feasibility and getting the enthusiasm there, and we're just at the point where we're starting to have all the leading edge companies benefiting from this," said Gates in a speech in May.

The fundamental idea behind Microsoft .NET is a shift from individual Web sites or devices connected to the Internet, to constellations of computers, devices and services that work together to deliver broader, richer solutions.

The .NET technology is "one of the most modern environments for developing and implementing systems," said Bob Hunt, senior research analyst at TowerGroup. "The .NET application is really a set of Microsoft standards. It allows you to operate under an overall Microsoft umbrella with an easy interface."

Financial Objects, a London-based software developer, has based the latest version of its banking platform, activebank2, on the .NET technology. Doing so will make it easier for financial institutions to scale up their operations and lower their cost of ownership, said Mike Pembroke, director of product management at Financial Objects.

"The .NET platform and the use of XML, in particular, is enabling all this huge flexibility. It saves an enormous amount of time developing software," Pembroke said.

activebank2 is a component-based offering that provides solutions for treasury and capital markets, lending, retail banking, messaging and payments, general ledger and Internet banking. The product is an integrated front-to-back office solution that provides extensive functionality for both retail and wholesale banking. "We support everything from the back-end right through to the point of interaction with customers," said Pembroke.

That includes non-traditional devices, such as mobile phones and PDAs. "activebank2 allows banks to deliver a consistent user interface to the customer regardless of the channel the customer is using," Pembroke said.

The .NET platform is more efficient for developing Web services applications than Java, and it lowers the cost of ownership for financial institutions, said Pembroke. The XML-based activebank2 solution offers "zero footprint deployment" and provides end users with screen design flexibility resulting in improved workflow and usability, he added.

The .NET architecture is "fairly new and not everything has been formally released as yet," noted Pembroke. Still, "we're definitely seeing the first wave of banks moving towards it."

Siam Commercial Bank, one of the largest banks in Thailand, is using activebank2 to support treasury operations for branches in Singapore, Hong Kong and offshore loans in Bangkok. The bank expects the product to reduce training costs, increase employee productivity and provide tighter controls over the treasury function.

activebank2 is customer-centric, rather than account-centric, said TowerGroup's Hunt. "What we're seeing is a great majority of banks are account-centric."

Customer-centric banks are distinguished by their use of systems to create individual records of client information according to each account. By putting the customer at the center and having the account information flow from the customer, it's "much easier for me to offer relationship-based products," Hunt said, adding that he expects more banks to move in that direction.

Financial Objects' move to a "state-of-the-art platform" for development and implementation makes them one of the leaders in the banking technology space, Hunt said. "It's what vendors are going to have to do."

High on the list of benefits of .NET is its compatibility with commodity software, which yields a high return on investment and low cost of deployment.

.NET also reduces the costs of servicing accounts thanks to greater automation, and lowers the IT investment thanks to XML's fast connectivity to existing systems.

.NET focuses on a half-dozen key principles: providing software as a service; bringing distributed computing to the Internet; utilizing abundant computing and communications; providing the seamless integration of multiple applications and devices; extending the user experience to voice, ink and handwriting; and putting the user in control of information.

Key to the .NET framework are Microsoft's .NET Enterprise servers, which are designed for mission-critical performance. The framework also includes technology that enhances security, provides authentication, manages Web applications and supports mobile devices.

VisualStudio.NET, the next generation of Microsoft's multi-language development tool, further allows software developers to quickly build XML Web services and scale applications.