New Access Channels Demand New Technologies

With consumer demand increasing for electronic services, financial institutions and software/technology providers should act now to migrate to these open technologies under a common architecture.

If financial institutions want to improve service delivery for consumers and reduce costs, they need to replace current delivery systemtechnologies. Internet technologies offer the best approach for constructing a common architecture for multichannel delivery of these services. With consumer demand increasing for electronic services, financial institutions and software/technology providers should act now to migrate to these open technologies under a common architecture.

Typically, new electronic access channels have been developed by institutions, such as Citibank, and technology vendors like IBM, which then created solutions for multiple financial institutions. Security First Bank, for example, developed an Internet banking capability, which it spun off as S1 for use by multiple institutions.

With each new channel, separate applications were developed for distinct solutions. Call center, branch, VRU, Internet, and wireless applications leveraged limited components from other solutions, thereby replicating capabilities provided within these other solutions. The result is a convoluted system with different vendors, higher maintenance costs and reduced customer service.

Running all of these assorted existing technologies is driving up maintenance costs and causing inconsistencies in customer service. What's needed are solutions that provide common components for business logic; connection with back-end legacy systems; managing transactions; and providing security and access roles and rules.

The core business logic of most transactions is the same whether performed by a call center rep or an online customer. Yet, financial institutions pay for a CSR solution and a Web solution and other solutions in one-time software costs, annual software maintenance and internal maintenance of interfaces, etc. Furthermore, maintaining multiple systems inhibits speed in releasing new services to the marketplace.

It's time for financial institutions to establish a common infrastructure to address these issues. Advances in Internet technology, such as Java 2 Enterprise Edition (J2EE) and Extensible Markup Language (XML) now offer financial institutions stable, proven technologies to rectify the current situation.

Financial institutions can optimize business logic and presentation layers and still effectively leverage legacy, core mainframe systems. Infrastructure products now exist to support Internet-based technologies. J2EE application server products such as BEA WebLogic, IBM WebSphere, and Sun iPlanet can provide infrastructure layering services such as transaction management, security and access role and rule management, common interfaces to backend legacy systems, etc.

Financial institutions and technology providers should take better advantage of object-oriented, component-based solution sets. By using these architectures, they can leverage a common code base across different access channels with different roles and rules based on the user. They can also use the same objects with different presentation layers. A VRU transaction, for example, can access the same business logic as the Internet or mobile user-the user interface or presentation layer can be a recorded voice and telephone keys or the mouse and keyboard of a PC, or the stylus of a PDA.

By going beyond different presentation layers, as open finance becomes more prevalent, financial institutions can extend these capabilities to other partners that can be accessed as Web services over the Internet using XML and evolving standards such as OFX/IFX and FIXML. Emerging Web services standards will enable new ways for financial institutions to offer value to customers.

Technology vendors would do the industry a great service by migrating the architectures of their solutions to make it easier for financial institutions to leverage and integrate solutions across channels. Open, standards-based solutions provide greater flexibility and extensibility over proprietary solutions. Consider what some Internet technology companies are already doing-for example, Broadvision is migrating to open standards and to the BEA WebLogic platform.

The cost optimization and service enhancement opportunities are enormous. More than 75% of the cost of delivery systems is the ongoing maintenance, with less than 25% for development and implementation of new delivery channel capabilities. Financial institutions should eliminate redundancies by establishing a common infrastructure based on open, Internet-based technologies. And redeploy these resources to adding new capabilities, enabling new value propositions, and attracting new customers.

J. David Hoffman is vice president and practice leader for the digital finance domain at Digital Focus (www.digitalfocus.com), an e-commerce integrator. He can be reached at (703) 561-5800.