Today’s financial institutions face a number of business, technology and architectural challenges. Business managers want to grow their business through targeted mergers and new, innovative product offerings while decreasing the cost of regulatory compliance and product introduction. Technology managers want agile systems that allow them to deliver business content at a lower cost using a faster deployment cycle. It is a challenge for technology managers to respond to these business imperatives if their business logic is locked up in islands of automation and their architecture is brittle and expensive to change. Business and technology managers recognise the need to achieve business transformation with minimal impact on underlying systems infrastructures.
Fortunately, service-oriented architecture (SOA), as part of a bank’s overall IT blueprint, holds real promise to address the challenges facing the banking industry and the technology managers who work to support this dynamic business environment. SOA is an architectural style that uses open, standards-based technology to allow systems, independent of technology infrastructures, to participate in seamless electronic message exchanges within and across enterprises. In conjunction with a move towards a component-based application architecture that will facilitate reuse of business functionality, SOA can provide a measure of business agility that many organisations do not have today.
At present, almost every financial institution is engaged in some kind of strategic initiative to move from their existing technology, application and data architectures towards a more flexible SOA. But how do technology managers know that they have achieved a workable solution and have avoided an ‘updated-with-latest-technology’ version of their current brittle infrastructure?
Evolution of the solution
Integration has evolved over the years from point-to-point connectivity, to an enterprise bus, to web services whereby applications can communicate across platforms and protocols. The transition from point-to-point application integration to integration via an enterprise bus provided two key technical benefits: reduced integration complexity and improved messaging infrastructure capabilities, such as guaranteed delivery, serialisation, synchronous and asynchronous communication, store-and-forward, and publish-and-subscribe. While technically compelling, this type of integration, with each application ‘speaking its own language’ to the enterprise bus, provides only infrastructure simplification and does not significantly improve business agility.
Web services are being touted as the magic enterprise integration ingredient. They provide the technical basis to deliver a common semantic representation of the enterprise. In delivering the technical refinements to address platform and protocol communications, it is easier to envision a common semantic model where all applications enjoy a common processing language or ‘transactional lingua franca’.
Common language
The technology associated with web services provides a standards-based foundation for business change: hypertext transport protocol (HTTP) is the standard protocol used to exchange information between browsers and servers; extensible mark-up language (XML) provides the base definitions required to structure information; simple object access protocol (SOAP) provides the set of rules to invoke processes via XML over the internet protocol; and web service definition language (WSDL) is an XML format published for describing web services. WSDL is often used in combination with SOAP and XML schema to provide web services over the internet.
However, web services technology does not prescribe to the IT practitioner how to deliver a proven technical infrastructure that will be responsive to business drivers. One of the gaps between theory and reality deals with the definition of services. At some point in their strategic pursuit of web services, financial institutions reach the conclusion that they must adopt a common definition of web services to enable faster creation or integration (mapping) across the enterprise. While IT managers easily realise that it is counter-productive to have web services defined within the scope of a single application or department, it is not so easily recognised that such definitions should extend beyond the financial institution. If plug-and-play integration is to be realised, institutions must look for and demand an industry semantic framework for services.
Industry standard
Similar to adopting industry standard technology, an institution can elect to conform to an industry standard semantic model. The Interactive Financial eXchange (IFX) is one such open standard semantic model that is applicable to financial institutions. Adoption of an industry standard semantic model, like IFX, can avoid internal service definitions and design discussions that are part of the process of creating an institution-specific definition of services. Utilising an industry standard semantic model also avoids locking into any vendor’s conceptual model with the hope that the vendor’s model will become a de facto standard in the industry.
In addition to addressing the semantic model, the technology team for a financial institution must deliver web services in a proven operational framework. To be a component of mission critical execution architecture, the services model must address versioning, service extensions, message aggregation for functional integrity and performance. By delivering a ‘transactional lingua franca’ that addresses these issues, the technology team enables a rich and robust computing environment needed to actualise the plug-and-play promise of web services.
The resultant ‘transactional lingua franca’ or ‘transaction hub’ provides the processing infrastructure to support enterprise-wide business process (BPM) and rules-based processing. Fidelity National Information Services’ (FIS) Xpress product is one example of a proven transaction hub that provides financial services content (standards-based semantic model), in a robust, scalable, high performance execution model, integrated with leading third-party BPM tools.
Emphasis on business process
According to a 2005 Gartner report, Benefits and Challenges of SOA in Business Terms, (by Michael Barnes, Daniel Sholler and Paola Malinverno): “An SOA approach effectively moves the emphasis and primary focus toward process definition, visibility and control. In the past (particularly in the client/server world), the focus of IT projects was on underlying technology or product implementation issues, often in an isolated project, with boundaries defined (unnaturally) by technology limitations and established organisational boundaries, not by any type of logical mapping to business realities.”
SOA moves away from application-centric development to functional process-oriented development. Thus, it allows the financial services organisation to group common functionality across siloed applications and manage this functionality more centrally by externalising key common functionality in the services layer.
SOA also supports the transition of ownership for the business processes from a pure IT function to more of a business function. The services defined are generic and independent of technology, and their semantics are more easily interpreted by business users. This provides the opportunity for business and IT to work together to understand what services are available and how various processes can be defined on top of these services to improve customer service, reduce operating costs or offer new innovative products and services.
Bridge to alignment
This alignment between IT and business is only possible with clear encapsulated business services as the bridge between them. When the business asks for new functionality, IT should not have to walk through the disparate interfaces with a multitude of systems to enable this. It should be a simple matter of configuring the required services and tying them together with business rules and process flows that can be defined jointly by IT and business stakeholders.
SOA enables business and IT to define business processes against robust sets of services that can span institutions to partners and other vendors, and allows varied products and product packages to be sold and serviced seamlessly. This creates a financial supply chain that delivers the best customer service at the lowest cost.
Delivering the promise
A common misconception in the move to SOA is that service-enabling the enterprise is a big-bang approach. It would be an extremely expensive and high-risk approach to take each application in the enterprise and try to expose all possible services from them without a clear business need.
The SOA best practice is to identify a specific business problem, such as a back-office process that needs automation, and to use this process to drive the services that need to be exposed from the underlying applications. The move towards SOA should be taken in incremental steps, including using strategic IT projects as a way to advance SOA capability.
FIS faces many of the same challenges as its banking customers. As a leading provider of core banking applications, it also needed a common enterprise SOA framework that allows for standard messaging between its channel applications and its multiple core banking systems. A vertically scalable transaction hub, such as Xpress, allows an organisation to add on component functionality and services that best suit the business and technology strategy of the financial institution. Through Xpress, FIS delivers an industry standard web services semantic model (IFX) and a library of more than 1000 robust business services with which to integrate the applications needed by a financial services institution.
Xpress is a time-to-market accelerator targeted towards financial institutions that are trying to enable a services-oriented architecture. It offers a cost-effective solution to integrate new technology with legacy systems and to migrate off old technology in a phased rather than big-bang approach, according to the organisation’s SOA strategy.
Alignment of functions
By implementing an SOA that addresses semantic model requirements, operational readiness and BPM, financial institutions can reduce operating costs, improve business and IT alignment, and provide the agility to deliver customer-focused solutions.
SOA with ‘transactional lingua franca’ is a fundamental change in how IT reacts to business needs. Working with a vendor that can accelerate the delivery of the promise, with standards-based business services on top of core processing applications, and orchestrating the service layer using technology-independent open standards, can allow financial services organisations to reap the benefits of SOA.
John Gordon is executive vice-president, Leveraged Product Development, Fidelity National Information Services.
