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A Strange New Brew

The latest Java improvements allow the programming language to seep even deeper into core banking systems

Once considered a nifty tool for adding graphic functionality to Web browsers, Java technology is poised to become a core component of mission critical systems and applications in the financial services industry.

Indeed, financial services and banking industries lead other industries in the adoption of Java technology. In areas as diverse as Web banking, teller applications, wireless trading and smart cards, Java already plays a crucial role and promises to extend its reach even further into core line of business functions.

"Java has the highest impact where e-business is a clear focus," said Mark Driver, research director at GartnerGroup. "Although Java has been primarily used on the front-end to date, it is moving towards the back-end."

For example, Yorkshire Building Society, one of England's largest savings institutions, has made E-Mortgage, a Java-based software solution from Ireland-based Eontec, the hub of its online mortgage solution. Surrounding the E-Mortgage application are a number of other Java-based products that maintain site security and minimize downtime. With Eontec's solution, Yorkshire customers are able to use the Internet in every step of the mortgage application and approval process.

Based on scalable Enterprise JavaBeans banking processes, E-Mortgage ensures that mortgages are processed quickly and efficiently, according to Linda Will, e-commerce director at Yorkshire Building Society. "We looked for a best-of-breed organization with innovative solutions and a strategic partnership."

Java-fueled, back-end systems have also made a splash on this side of the pond. For instance, e-Finance Suite, a Java-based banking solution from Boston-based Financial Fusion, powers First Tennessee Bank's online banking service for small business customers. Launched earlier this year, the service provides the ability to initiate wire transfers, originate ACH payments, view accounts, transfer funds and pay bills.

"The design and usability of Financial Fusion's products provides First Tennessee with the best online customer experience, promoting user productivity and increasing overall customer satisfaction," according to Susan Terry, senior vice president of online financial services at Memphis-based First Tennessee.

Meanwhile, financial services companies both here and abroad continue to embrace Java applications for wireless and smart card initiatives, and growth is expected to continue in these areas. Some are even willing to pay to push the Java envelope. American Express, which has adopted Java Card-based smart card technology for use with its Blue card, last year sponsored a contest called Code Blue challenging Java developers to create innovative applications for use on smart cards.

One factor driving the adoption of Java solutions for mobile commerce (m-commerce) applications is the Java 2 Micro Edition (J2ME), which bundles together the Java technologies useful for developing applications for pagers, cell phones and personal digital assistants. This aspect of Java helped 724 Solutions, a mobile commerce provider, implement wireless Java-based solutions at four top banks, including Wells Fargo, which went live with its Wells Wireless initiative earlier this year.

The service, which is offered free of charge, allows Internet banking customers to access financial information and conduct transactions through Sprint PCS phones and Palm VII devices. It lets users view account balances and transaction history, transfer funds between accounts, obtain stock quotes and monitor stock watchlists. Additional features, including bill pay and brokerage trading services, are planned.

Herb Paquette, vice president, banking and brokerage at 724 Solutions, said he "likes how portable Java is. It is very easy to get customers up and running on any platform and to give customers the ability to customize the solution."

A STRONGER BREW

Indeed, Java was designed with just such "portability" in mind, according to Jim Balog, global solutions manager at Mountain View, Calif.-based Sun Microsystems. "The portability of Java-its write once, deploy anywhere capability-is clearly one of its greatest strengths."

With such flexibility, Gartner's Driver sees the presence of Java applications in financial services only becoming more significant over time. "With IBM pushing Java technology on the mainframe, I think that we're going to see a lot more Java in financial services. J2EE Java 2 Enterprise Edition is the next major wave for Java. I expect to see more lines of business applications based on the Java platform because they are more network-centric than C++ applications."

J2EE and Java-based applications are "definitely the way of the future in financial services," said Meredith Hickman, an analyst with Celent Communications. "Banks looking to implement a whole suite of applications should look to Java solutions because of the ease with which different modules can be integrated."

As an object-oriented programming language, Java makes it possible to reuse software components and add vertical application components such as bill payment, noted Mark Chisam, global solutions banking architect at Sun Microsystems. Code re-use has been seen as a type of holy-grail in application development. "We have not yet reached nirvana in terms of code re-use, but Java is getting us closer to that ideal," said Chisam.

With J2EE, Sun and the Java Community Process-the standards committee that oversees Java platform development-have added support for multi-tier development with the incorporation of Enterprise JavaBeans, Java Servlets API, JavaServer Pages and XML technology. J2EE's predecessor, Java 2 Standard Edition (J2SE), included a number of features useful for enterprise application development-including platform portability and security as well as database and other enterprise resource connectivity-but lacked business and server logic components to make it a true enterprise-strength development platform.

EYES ON THE ENTERPRISE

Leading application server vendors such as IBM and BEA Systems have endorsed J2EE and introduced integrated toolsets for enterprise Java development. Application servers are the middleware that consolidate raw information from back-end systems and databases and allow data to communicate with front-end clients. Modular, scalable and robust, application servers are central to e-commerce services and, increasingly, are connected to all types of enterprise applications.

Driven by Java, the application server market is projected to soar from $585 million in 1999 to $9 billion in 2003, according to Giga Information Group. "The Enterprise JavaBean component model and associated J2EE standards will dominate the application server market and drive a potential growth rate of almost 180% annually," said Mike Gilpin, a research analyst at Giga.

BEA Systems' WebLogic and IBM's WebSphere lead the application server market with an estimated 2000 market share of 24% each, according to Giga. Other application server vendors include Art Technology Group (ATG), iPlanet (a joint venture between Sun Microsystems and AOL), Sybase and Allaire.

Enterprise JavaBeans, a set of Java server-side components based on standard distributed object technologies (CORBA and RMI), provides the business logic in an application. The introduction of Enterprise JavaBeans four years ago signaled the maturity of the Java platform, said Colin Piper, chief executive officer at Eontec's North American subsidiary. "We took a gamble basing our applications on Java but we believe it is one that has paid off."

Eontec's BankFrame, one of the first Java-based banking applications, includes modules that support all aspects of bank functions, such as consumer lending, mortgage, call center, teller, Internet banking, wireless banking and retail and commercial sales and service.

After making an initial splash with its Internet banking component, Eontec reports that demand is escalating for its other banking modules as well. "The ease of maintenance, scalability and performance with Java-based applications is really superior to client/server solutions," Piper said. "The fat server/thin client architecture of Java solutions takes away a lot of the complexity that users encountered in managing client/server systems."

Financial Fusion, a subsidiary of database vendor Sybase, is capitalizing on Java's integration and platform portability. "Our solutions integrate very well with core infrastructure applications because they are Java-based," said John Treadway, senior vice president of marketing at Financial Fusion. "The cross-platform support and portability that our solutions offer would be very hard to replicate with an application written in C++."

Another advantage of Java-based solutions is lower cost of ownership. Financial Fusion's software developers have realized productivity increases of almost 30% as well as code that's less buggy.

Yet another vendor of Java-based solutions is Brokat, a German-based company that last year acquired the Java-based solutions firm Gemstone Systems. Although its presence is strongest in Europe, Brokat has been increasingly focused on selling its BST Enterprise Server (formerly marketed as Twister) to companies in North America. GemStone/J-which provides encryption, digital signature and key and certificate management-is integrated into Brokat's suite of Internet banking applications.

TOOL TIME

For companies planning on building server-based Java applications, there are an increasing number of toolset options available.

Compuware, a manufacturer of client/server tools, recently announced the availability of OptimalJ, a development and deployment environment for enterprise-class J2EE applications. And companies such as Flashline and Drala Software are already selling Java software components, offering hundreds of industrial-strength JavaBeans and Enterprise JavaBeans components through their online marketplaces.

Compuware's announcement is yet another sign of Java's maturation and its growing acceptance by conservative financial institutions. Compuware's toolset joins Sun's Forte for Java 3.0 as well as development tools from IBM and BEA Systems.

Forte for Java 3.0 has wizards and templates for rapid creation and packaging of EJBs and their associated Web components and manages XML deployment descriptors.

The promise of all of the J2EE development environments is the ability to deploy enterprise business applications as Web services. With over two million developers registered with Sun's Java Developer's Network, it appears that a pool of talent should be readily available.

However, finding the right kind of talent is important. "The fact that Java is a true object-oriented language means that it is very difficult to write code without solid object-oriented skills. C developers could cheat a bit with C++ but not when it comes to Java," said Gartner's Driver.

Eontec's Piper noted that "having the right architecture and methodology for delivering Java systems is crucial to the success of such projects," since, he adds, "it is just as easy to write bad Java code as it is any other kind of code."

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