“We spent the better part of six months on that,” Mohammed says. In particular, shifting from batch processing to real-time reports created bottlenecks in the database, where the core business logic resides. That’s one reason Merlin moved to an Oracle rack implementation: to allow the company to add servers and scale performance easily.
The lessons learned go beyond startups such as Merlin, Mohammed observes. “It’s a decision every company has to go through: Do you want to spend a year migrating or take three to six months … and get it working right from the beginning?”
Leveraging legacy with SOA
Layer after layer of legacy systems send many financial services firms in the direction of SOA and Web services technologies. In fact, financial services customers make up 30 percent to 40 percent of the customer base for SOA tools and infrastructure, says Mindreef CTO Frank Grossman. “These are companies that have acquired so many different pieces. They need to consolidate systems, and XML is a great way to do that.”
Mindreef customer Wachovia, the nation’s fourth-largest bank, has a network of 2,500 branches, 6,000 ATMs, 3.9 million online customers, and legacy mainframe systems that, in some cases, date to the late 1980s or early 1990s, says Chris Brown, senior IT architect at Wachovia’s retail banking division.
In Wachovia’s retail operation, technology leaders latched onto SOA early as a way to expose core assets -- such as customer information, deposits, and money transfers -- as services. The transition to standards-based services has allowed the company to graduate from a rigid, homegrown online banking application to a third-party online banking product from Corillian, with services running on a version of IBM WebSphere for the mainframe z/OS platform.
With the help of MindReef’s SOA testing and compliance tools, Brown says that his staff is building service-based apps, including complex call center applications, and working on retiring expensive legacy integration solutions in favor of WebSphere. Eventually, Brown would like to retire Wachovia’s legacy back-end systems altogether, but that’s easier said than done.
“The investment in legacy, core systems is deep. You look at replacing those, and there are a lot of zeros after the 1,” Brown says.
In the meantime, exposing services in an SOA gives Wachovia agility. “It’s a nice way to try to expose [legacy systems] without having to rip and replace them. And the service interface gives us the ability to replace them gradually because you can take out the back-end system but keep the interface,” Brown says.
Security and compliance
Brian Babineau, an analyst at Enterprise Strategy Group, puts the compliance challenge succinctly: “You’ve got to look at technology to help mitigate failure to comply because it’s just too costly not to.”
Data security is the classic example. Banks and investment houses have always had to contend with the threat of fraud, but the growth of Web-based services and around-the-clock access, coupled with data privacy regulations such as California’s SB 1386 and guidance from the Federal Financial Institutions Examination Council, have put a premium on securing customer accounts and customer data.