[ I B M] Ibm Banking Overview Final Version For F T U
- 1. The IBM Banking Industry Framework Accelerating Solutions for Smarter Banks IBM Banking solutions Framework for FTU – May 7 th 2011 Aaron Axworthy Director Financial Services Sector - Vietnam
- 2. Reasons to be optimistic There is an extraordinary opportunity ! $1,264 trillion The value of global assets 3 will quadruple by 2025 – calling on a vibrant global financial system to intermediate and manage. Half the world is unbanked. Just over half of world’s adult population do not use formal financial services to save or borrow. 2 2.5 billion Growth in world GDP 1 from 2010 thru 2025 will put the current crisis in context. 5.8% CAGR 1 - Nominal 2 - http://financialaccess.org/sites/default/files/110109%20HalfUnbanked_0.pdf 3 - Assets = deposits, equity and fixed income
- 3. Dramatic forces changing the world’s most complex system. A global system moves more than $74T of money each day A financial supply chain that is massively interconnected and interdependent Public and private partnerships are suboptimal cross-border and within borders System requires 24/7 continuous flow of information Rapid increase in types of data entering financial system from “real economy” digitization A criminal element that grows more sophisticated In total the system intermediates the needs of billions of people in 190 countries in thousands of languages. An adaptive system evolving organically Policy makers Regulators Supervisors Financial institutions Compliance Laws and rules Surveillance and monitoring Standards Soundness Stability
- 4. Commercial banking Retail banking Corporate finance Asset management Custody and agency services Sales and trading Payments Processing Anti-Money Laundering Compliance Reporting Trading Systems General Ledger Account Opening Customers Partners Regulators Service Providers Inflexible, complex operations and silo’d data hinder progress in using data as a strategic asset
- 5. IBM provides a comprehensive framework that delivers accelerates solution deployment The framework provides a banking-specific software platform with… Banking extensions and pre-built solution accelerators to speed deployment Best practices and business- specific usage patterns to lower risk Support for adoption of open and industry standards A choice of business applications from IBM business partners An approach to align technology with business needs The framework gives you speed, flexibility and choice in deploying solutions while reducing cost and risk! Integrated Risk Management Customer Care and Insight Integration Optimization Analytics Collaboration Security Resiliency Core Banking Transformation Payments and Securities IBM Banking Industry Framework
- 6. The framework delivers business value Simplify your infrastructure, reduce costs, and enable growth through innovation Enable integration of information and processes across the bank Build an efficient technology roadmap that you can adjust over time based on business needs Implement framework projects to address business problems across the enterprise Drive a greater return on project investment through asset re-use Speed deployment of solutions
- 7. Framework projects in four domains provide the capabilities to address banking pain points Integrated Risk Management Customer Care and Insight Integration Optimization Analytics Collaboration Security Resiliency Core Banking Transformation Payments and Securities The core banking transformation domain allows you to modernize and renovate the legacy applications that support core banking functions while aligning with the changing needs of the business The customer care and insight domain helps you build a foundation for creating a single view of the customer and enabling more effective and efficient sales and service The integrated risk management domain supports taking a holistic approach to managing financial risk, financial crimes, operational and IT risk, and compliance The payments and securities domain helps you progressively transform your payments operations to become more flexible and efficient IBM Banking Industry Framework
- 8. Choose from leading business partner applications for your solutions … with 35+ IBM business partners in the framework ecosystem Proven integration between IBM framework middleware and industry-leading partner applications provides… Faster deployment Easier integration Lower cost of operations = validated for solutions that leverage the IBM Banking Industry Framework for payments & securities
- 9. Start simplifying and realizing benefits with a framework project … select from 20 project areas across 4 framework domains Integrated Risk Management Customer Care and Insight Integration Optimization Analytics Collaboration Security Resiliency Core Banking Transformation Payments and Securities IT Foundation Transformation Core Banking Process Agility Core Banking Application Modernization SEPA Compliance Corporate Services SWIFTNet Modernization Retail Payments Payments Process Efficiency Digital Payments Conversion Financial Risk Financial Crimes Operational and IT Risk Governance and Compliance Customer Insight Optimization Customer Information Optimization Multi-Channel Transformation Sales Process Optimization Service Process Optimization Compliance Process Optimization Marketing Process Optimization IBM Banking Industry Framework
- 10. Core Banking Transformation Transforming back office legacy systems As banks seek to grow revenue and improve operational efficiency through product innovation, globalization, and M&A activities, legacy back office systems often become inhibitors Mismatch between the horizontal business processes and the vertical application silos leads to ever-increasing IT integration complexity Heavily customized and inflexible legacy systems make it hard and expensive to support regulatory changes
- 11. Core Banking Transformation Project Example Example Build new business service components & integrate with legacy, leveraging IBM Component Business modeling approach Core Banking Process Agility – Bundled Offerings Project Needs to sell customized product and service bundles and manage the end-to-end lifecycle of the resulting contracts while maintaining legacy systems as-is. 9 to 18 month project Deliver revenue growth through SOA while leveraging legacy Client issue Benefits Solution Framework project partners Core banking workbench for model and business-driven development Information FrameWork (IFW) data models Business rules management Process choreography Enterprise service bus Master data management Framework technology capabilities
- 12. Payments and Securities Banks need flexible and efficient operations Commoditization of payments services resulting in shrinking returns Need to specialize and innovate to drive revenue growth Market harmonization across the global payments infrastructure drives need for integration with third parties Increased merger, acquisition and disposal activity has resulted in redundant operations Sophisticated fraud and anti-money laundering activity drives need for transparency and security
- 13. Payments and Securities Project Example Financial institutions are required to comply with Single Euro Payments Area mandates 2 to 9 month projects Standardization of processes, process efficiency, reduced cost and risk 3 Deploy an ISV-provided payments application 1 Build compliance into existing payments applications 2 Renovate existing payments applications Client issue Benefits Solution options Framework project partners Banking process and data models Process choreography Application connectivity Message transformation to SEPA standards XML message management to SEPA standards Accelerators for building a custom enterprise payments hub Framework technology capabilities MMM EuroDebit MTS Global Payplus Open Payments Framework SEPA Compliance
- 14. Integrated Risk Management Holistically manage risk across the enterprise Banks need to: Understand market and credit risk exposure across multiple silos Secure all transactions and forms of interaction Proactively prevent increasingly sophisticated internal and external prohibited activities Effectively manage detected events Proactively manage internal and external potential risks Understand and manage increasingly complex compliance requirements at optimal cost
- 15. Integrated Risk Management Project Example Lack of trusted and integrated risk information makes it difficult to understand actual risk exposures facing the bank and also results in inaccurate reporting of exposures to regulatory bodies and executive management More timely and better decision-making Improved accessibility to risk information across the enterprise Reduced costs Consolidate data to create a trusted and accessible source of information Apply analytics and business intelligence to generate enterprise risk reporting Apply portal and collaboration technologies to give end users easy access to information Client issue Benefits Solution Framework project partners Data warehousing and master data management Common banking data models Enterprise dashboards, scorecards, and reporting templates Alerts based on business events Access via web, email, mobile Enhanced visualization capabilities from IBM Research Framework technology capabilities Financial Risk – Risk Insight and Control Project
- 16. Customer Care and Insight Optimizing the customer experience Consumers… Demand innovative and more customized products and services Want a consistently high quality customer experience across all touch points Banks… Must be able to identify their most profitable customer relationships Need an enterprise view of customer relationships to optimize the customer experience Need to balance managing cost, risk, security and compliance with meeting customer needs
- 17. Customer Care and Insight Project Example Customer Information Optimization – Customer Data Integration Project Customer data is duplicated and spread across multiple silo’d databases, leading to an inconsistent experience for customers dealing with the bank Projects can be implemented in as little as 6 months Improved customer satisfaction and retention, reduced maintenance costs Client issue Benefits Banking data warehouse models Data warehousing Master data management tools Reporting tools Process choreography Implementation expertise Framework capabilities Build an integrated data warehouse to create a consolidated customer profile and enable customer-centric processing Solution
- 18. Accelerating Solutions for Smarter Banks Thank You
Editor's Notes
- #3: Less than a zero sum game – the new normal. We are realistic about where we are and the work ahead. But there are clear signs that it’s time to be optimistic about the future. When we look towards the future there are some very strong trends that will prevail – and the numbers are large. Growth will return and when it does we’re looking at a very large opportunity. This will challenge all of us to look at global finance and the financial supply chain in a very different way. The time to consider these changes is now. Projected growth of 5.8% CAGR over next 15 years will put the crisis in context. Half the world, or 2.5 billion people are unbanked – and this opportunity is already being aggressively pursued by using the growth in mobile devices as a platform for banking - for example in India there were 506 million mobile subscribers in November 2009, compared to approximately 124 million debit and credit cards (New York Times-May 2009) and Africa is seeing exponential growth in the same manner. Combine all this with global assets that will quadruple in the same time frame 2025 !!! There are a lot of assets to intermediate, manage, move and grow. The magnitude clearly calls on a vibrant global financial system to intermediate and manage the world’s capital and wealth.
- #4: 1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England 2 – OPRA and IBM analysis 3 – WWIC2008: From Autonomous to Cooperative, IBM Research While we have always understood the Financial system to be global, interconnected and complex the problems of the last 2 years have shone a light on exactly how little insight we had given the amount of information we had at our fingertips. This complex adaptive system can never be 'predicted', however a much better job can be made of analysing and understanding the interconnectedness, technology will be the driver of this capability, data and information will be the fuel. The recent melt-down proved that soundness and stability now needs to be a cross boarder priority in order to reflect the increasingly interconnected and complex financial ecosystem. in addition the market continues to evolve, some of those forces are - A new age of institutions based on new business models that maximize specialized market opportunities Client expectations are evolving and require new levels of service excellence unbiased advice and convenience to address them Transparency requirements characterized by radically increased oversight developed to restore stability and confidence Renewed focus on the efficiency of the financial information supply chain forcing the 'fit for purpose‘ information management agenda Factoids From 1985 to 2005 nodes in the financial systems network of the top 18 countries have ballooned, increasing roughly 14-fold. Financial data traffic volumes continue to climb, today there are roughly 25 billion market data messages passing through global trading systems each day. By 2011, the world will be 10 times more instrumented then it was in 2006. Internet connected devices will leap from 500M to 1 Trillion. On page points: The system moves more than $74T of money each day It is massively interconnected and interdependent The complex relationships between countries Redundant systems that require 24/7 and a continuous flow of information Rapid increases in types of data entering financial system from “real economy” digitization The constant menace of very sophisticated criminals The vastness of the work performed by the system intermediates the needs of billions of people in 190 countries in thousands of languages.
- #5: Banking operations today are highly complex and inflexible. All systems and applications are interlinked to produce an enterprise process. To connect these, most times, one-off direct connections between functions are made among back-end data and business processes. This lacks and enterprise-level approach. The result: A change to one system or process creates the need to change the whole business process. And test each system that touches the one changed. Adding complexity are the number of interfaces that banking systems must accommodate – from customers and business partners to regulators and third party service providers. Additionally there has been an explosion of data in banking systems in recent years. Customer information is spread throughout the organization and can reside in many different systems. Because of this, the different lines of business within a bank may serve the same customer, but may not be sharing data. As a result, the customer may experience different levels of service and may have to provide the same information to multiple organizations. The inability to use information effectively across the enterprise can keep banks from providing the right kind of experience for their customers.
- #6: IBM’s overall solution strategy links business and IT objectives to give you the capabilities you need to be successful. IBM and business partners provide industry solutions to help meet specific strategic objectives. To support these solutions, IBM provides the IBM Banking Industry Frameworks as a middleware platform to support banking solution deployment and integration. The framework gives you flexibility to deploy multiple solutions at the pace the makes sense for your business and allows you to reuse what you already have in your IT portfolio. This makes implementation faster and lower risk than alternative approaches. The IBM Banking Industry Framework delivers IBM market-leading software, along with banking-specific software extensions, pre-built solution accelerators, and best practice software usage patterns to speed deployment of solutions. Examples of extensions and accelerators include: Common banking process and data models – Information FrameWork and Banking Data Warehouse models IBM products specifically developed to meet an industry need, such as the WebSphere Multi-Channel Bank Transformation Toolkit, a product that accelerates the development of integrated retail banking channel delivery applications The banking framework supports solutions across the enterprise – and framework offerings are organized into four domains – Core Banking Transformation, Customer Care & Insight, Integrated Risk Management, and Payments & Securities. Many leading financial institutions are approaching transformation progressively, implementing solutions one project at a time that stand on their own – yet can leverage the value created in the one previously completed. But how do you do this and ensure that your solutions “fit” together? The IBM answer is an industry-oriented framework.
- #7: The framework delivers value to your business along six dimensions
- #8: Framework projects are offered in four domains – each one helping you to address a set of common business issues your bank faces. Many framework projects have applicability across multiple domains – for example a project to centralize customer data can have big benefits for improved customer care and insight and also for integrated risk management.
- #9: IBM business partners provide market-leading applications to support projects across the framework domains. Strategic partners have validated on our framework and/or have multiple customer proof points showing that they work with our framework. Many of these partners have proven they integrate with our middleware which makes it faster to deploy and easier to integrate their applications. It also lowers the related costs.
- #10: You can get started with a framework project from one of 19 project areas across the four framework domains. Let’s take a closer look at the Integrated Risk Management offerings.
- #11: Source : Gartner “Hype Cycle for Consulting and Systems Integration, 2007,” July 2007
- #15: Banks need to: Understand market and credit risk exposure across multiple silos to make financial and risk decisions consistent with business objectives Secure all transactions and forms of interaction, proactively prevent increasingly sophisticated internal and external prohibited activities and effectively manage detected events Proactively manage potential risks, both internal and external, business and IT, resulting from events impacting operations, processes and applications Understand and manage compliance across a dynamic set of voluntary and mandatory requirements imposed by multiple regulatory bodies, across operating jurisdictions, at an optimal cost for value