Financial Services Industry Banks on SOA for Added Agility

Ann All

I generally take articles that describe early technology adoption with a healthy dose of salt. Such articles are typically heavy on analyst and vendor speculation and light an actual user experience.


I am making an exception for this CIOUpdate piece which describes banks as early adopters of service-oriented architecture. Why? In a previous life, I edited a Web site devoted to financial services technology. So I recognize the ring of truth here, even though the sources are -- you guessed it -- vendors and analysts.


After years of cost cutting and indifference to customers, many banks now see customer focus as a way to differentiate themselves from the competition. Thus, they have become (according to IDC), the number-one vertical in the CRM industry.


The holy grail of bank customer service is boosting the recognition factor, so folks can get a personal greeting -- and hey, maybe a targeted marketing offer -- whether they are online, at an ATM or in a teller line.


A poster child for this personalization is Signapore's OCBC Bank, which lets customers update their contact details and tweak their account preferences at its ATMs. Integrated with the bank's CRM software, the machines also present personalized marketing offers.


For years, vendors have been pitching a "branch of the future," where all of this could happen. But banks haven't been buying.


Why? Waves of mergers and acquisitions have not only eroded customer loyalty, but also left acquiring banks with a mess of heterogeneous technology. Most of it is creaky infrastructure badly in need of an update.


The financial services industry's increasingly strong need for simplified integration and business agility plays right into SOA's sweet spot, especially when it involves legacy platforms they may need to maintain for a few more years.


Not only that, but much of banking is based on common core transactional services like opening accounts. Vendors like IBM insist SOA plays nicely with mainframes, which are still quite common in the financial services industry.


Sounds like an SOA power play.

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