January 14, 2004

Moving to open standards, BPM reengineers its branch system and integrates channels.

Clive Whincup bet big three years ago and is now reaping the rewards, after his bank restructured its entire branch platform around Linux and Web services.

"At the time, it was a calculated risk," says Whincup, IT director at the Italian Banco Popolare di Milano (BPM, Milan). That's because critics said that while Linux was good for certain applications, such as e-mail, it lacked the ability to handle mission-critical solutions.

"We looked at it in detail and did a lot of work internally," testing and researching Linux, Whincup says. That included working closely with IBM (Armonk, N.Y.) and Stamford, Conn.-based Gartner to examine the potential. At the time, he recalls more businesses were starting to look at Linux and "were giving it a positive response. When we looked at it, no real reason emerged why the same thing could not be done for more mission-critical situations."

BPM is Italy's 19th-largest bank, with 600 branches, 7,000 employees and more than EUR 18 billion in assets. At the time of the operating system review, its branch platform operated on IBM's OS/2, which Whincup says was "no longer viable in terms of support."

BPM set out to re-engineer its system with a goal of moving to open standards. By doing so, Whincup says, "we would treat portability and interoperability as key business assets." A key goal was to integrate all of the channels and the different technology platforms.

So it conducted a proof of concept in 2001 and designed some core applications on Web-architecture using J2EE and central back-end processing using an IBM mainframe. The bank wanted to move servers out of the branches and consolidate them in the central processing center by using partitioning and creating virtual servers running on IBM's zSeries mainframe. That's reduced the time for deployment, cut hardware costs and improved the management of server administration. Now, deploying a new server is a "question of a software command," Whincup says, enabling "scalability and improved response times."

Seeking Flexibility

One challenge was dealing with the "peakiness" of the company's Internet usage and "correctly sizing a server file. We have a flexible approach which can virtualize the server. It can be given as much resources as the mainframe has." Eventually, Whincup says, BPM "will actually eliminate the need for a physical file server."

In addition to IBM's WebSphere middleware, BPM also turned to Jacada Ltd. (Atlanta), to help link the front end to the back-end mainframe. One of the areas to benefit from the new architecture is marketing. "We wanted to be able to do inserts and sales prompts and marketing-driven messages within the operational process," Whincup says. Now cross-selling will be easier, because during the transaction process branch employees will be prompted to propose additional products or services.

The project hasn't been without hurdles; Whincup notes that BPM had to build Linux expertise in-house and rely heavily on IBM. Also, getting a handle on "the kind of transaction volumes" was a challenge. Whincup has been involved in "other significant multiple-channel projects. What makes this project different is the scope and breadth."

The system is up and running at one branch and as BPM enters 2004 it will begin bringing other branches into the fold with a view to a full-scale rollout by April.

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SNAPSHOT

Institution: Banco Popolare di Milano (BPM, Milan)

Assets: EUR 18 billion

Business Challenge: Move branch system off of OS/2 platform.

Solution: IBM (Armonk, N.Y.) WebSphere; Jacada Ltd. (Atlanta) integration tool.

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