"While banking has become a 24-hour-a-day, seven-day-a-week business, there are still servers that sit idle overnight," Fisher says. "These units can be eliminated or loaded with other business applications that are utilized more often. This reduces operating costs and increases efficiency."
Perhaps the most popular approach to server consolidation today is virtualization, which allows banks to essentially create multiple server environments on a single machine. Another, increasingly popular option -- one that allows banks to scale capacity up or down with extreme flexibility -- is on-demand computing: Rather than support servers in-house, off-site hardware is leased from third parties in a pay-as-you-go utility model. At the heart of this idea is the concept of cloud computing.
But while cloud computing has been getting a lot of attention lately, Bart Narter, a San Francisco-based SVP in Celent's banking group, cautions that the model isn't likely to play a mission-critical role going forward. "Cloud computing, in its truest form, is the outsourcing of storage, and using an interface to access information over the Web," he explains. "With data security top of mind these days, it is unlikely that banks will keep any core data on a cloud."
That doesn't denote the end of the trend, however. "Instead banks are opting for internal clouds, which is server virtualization within their own data center," Narter says. "I don't see pure clouds sweeping the financial industry, due to data concerns. Internal clouds are the hip way to take advantage of virtualization, and this trend will grow."
ATB has been using virtualization since 2005. "Virtualization is all about extracting key data from a variety of end points, and achieving high levels of uptime with minimum complexity and lower operating costs," says the bank's Hansen, who notes that ATB currently is determining which processes will drive additional savings in the future.
In addition to creating capacity flexibility, virtualization also is an ideal solution for banks committed to sustainability. Auckland-based Bank of New Zealand (US$16.8 billion), for example, was close to reaching capacity in its data center in 2007. While it needed to maximize space and lower operating costs within the data center, it also wanted a solution that would support its newly instituted carbon-neutral focus, a goal it wanted to achieve by 2010, according to a release.
The bank overhauled its mission-critical front-end IT environment -- including its Internet banking, bank teller functions and core back-end data -- and transitioned systems to Raleigh, N.C.-based Red Hat's Enterprise Linux 5 running under Armonk, N.Y.-based IBM's z/VM virtualization solution on a mainframe. By consolidating servers and reducing its front-end systems in the data center, the bank has slashed its carbon footprint by 30 percent, according to the company statement. "We have also reduced our front-end power consumption by nearly 40 percent, which means we are on our way to becoming carbon-neutral by our 2010 goal," said Lyle Johnston, infrastructure architect for BNZ, in the statement.