01 February 2004 Comments

 

The millstone of mainframes

Andrew Kukielka , consulting director, Financial Industry Practice, HP EMEA, says that it is finally time for banks to rid themselves of cumbersome mainframes and look towards open standards

Traditionally, financial institutions have built their core systems around huge mainframe computers running bespoke applications to handle the crucial tasks of processing and posting transactions, performing deposit accounting, maintaining loan accounts, clearing payments and so on. Although these systems were inflexible and expensive to install and maintain, they met the needs of the financial sector for many years, despite relying on 1970s technology and antiquated programming languages such as Cobol.

Although these machines excel at core tasks such as processing large volumes of data rapidly, it is difficult to build new functionality into the systems. This was not always a major problem but the shifting topography of the financial services market has placed greater emphasis on the need for flexibility and the ability to react to market demands.

In the last ten years things have changed. From having one point of contact with customers — the branch office — banks have opened myriad channels of communication from web interfaces to digital television and telephone banking. Add to this the increasing competition in the marketplace and the rapid development of new technologies and it becomes clear that banks need to implement more flexible, adaptive IT infrastructures to meet the changing needs of the industry.

Mainframes in this context are too proprietary and inflexible to effectively support the needs of financial institutions. The time has come to cut loose the millstone of mainframes and look towards open standards solutions that can cut costs while delivering more value. By more closely aligning IT with the needs of business, companies can get a much higher return on their investment in technology.

There are further reasons for moving away from a mainframe environment. In the past, IT solutions were arranged around discrete business units within an organisation so a bank may have had one system for mortgages, one for current accounts, one for loans and so forth. Now, in a global economy, it is vital that all systems are integrated to present a single view of all relevant information in real time. This is notoriously difficult to achieve with mainframes.

Instead, more and more companies are looking towards solutions based on clustered servers which are inherently modular, scalable and flexible. Furthermore, platforms built on Open System standards are delivering new ways in which organisations can cut costs without sacrificing reliability or performance.

By deploying Industry Standard Servers, financial institutions can not only realise significant cost benefits but also create a responsive, flexible IT infrastructure in which new applications can be integrated quickly and efficiently. The lumbering monolith of the legacy mainframe seems prehistoric in comparison.

As the competition continues to intensify in the financial services industry and customers demand better performance and accountability, organisations must look to freeing their computing systems from the restraints of legacy systems built in a different era for different needs. Otherwise they face losing out to more agile rivals who possess the foresight to align technology capability with business needs.

The companies that look to this new computing paradigm are starting to reap the benefits of open, flexible infrastructures — and enjoying the benefits of having cut the millstone of the mainframe. Improve efficiency

Improve efficiency

• Automation

• Re-engineer processes

Reduce costs

• Outsource

• Move to Open Systems

Improve flexibility, responsiveness

• Change or update systems

Business imperatives:

• Cost

• New revenue streams

• Flexibility

• Responsiveness

• Competitiveness

• Service

• Regulatory