A Question of Degree
Some vendors have already completed the journey. "We basically spent over $100 million over the last three-and-a-half years, building from scratch a brand-new set of applications from the ground up on J2EE," says Imad Mouline, chief technology officer of S1 Corp. (Atlanta). "Even though we have an application that's completely turnkey that can be used without programming, we want to make it available to other systems."
Thus, bank programmers can either write Java applets that run alongside of the S1 applications, or they can develop more extensible Web services using either J2EE or .NET development tools. "Every one of our components exposes its features via Web services as well as a Java API [application program interface]," says Mouline.
Web services technology also helps vendors expand their technological footprint and customer reach. For instance, in order to address the credit union market better, Fiserv (Brookfield, Wis.) acquired IntegraSys from EDS in July 2003. IntegraSys had adopted an SOA development methodology using Microsoft's .NET and soon discovered that Fiserv was adapting the same architecture. "It's something that really gives us a strong advantage now," says David Turner, CIO of IntegraSys. "We can more easily integrate with other business units within Fiserv and offer services that they have to our credit unions."
The architecture has allowed IntegraSys to integrate more easily with third-party providers such as Experian (Costa Mesa, Calif.), which offers a Web service for pulling credit reports. In another instance, IntegraSys had a core systems client that wanted to retain its existing loan origination package. "The credit union technology staff, within one hour, was able to utilize our Web service to book a loan from their loan origination system," Turner says.
But it's not always that easy. For larger organizations such as Citigroup (New York, $1.26 trillion in assets), it usually takes considerably more than an hour to connect two services together, even if there's no programming involved. "As more and more services become available, whether they're available inside your own company or you're tapping into resources outside your company, like CashEdge [see article, page 11], the ability to integrate with all these other systems, services and companies is in many cases more challenging than the individual development itself of a particular service," says Howie Schechtman, vice president and technology director for CitibankOnline.
Not only does the connection between two systems have to work as intended, but the various parties involved also have to negotiate service level agreements (SLAs), performance guarantees and contingency plans. So if a visitor to a Citibank Web site clicks on a link provided by a content partner, the system cannot simply freeze up. "Even though we have an SLA of 99.5 percent, we want to be able to allow the customer to continue and not be stuck waiting for a response," Schechtman says.
Citibank has cautiously embraced Web services and the vision behind services-oriented architectures. "We're always on the road to improve our enterprise architecture," Schechtman adds. "We already have a multichannel architecture, so it's easy for us to take a function like a wire transfer and put it on our ATMs, as well as on our Internet applications."
But Schechtman will only go as far as open standards will take him. "A lot of the vendors provide proprietary solutions, which doesn't give you the most flexibility," he says. "Those proprietary solutions are really effective at jump-starting a smaller financial institution."
But, for an organization the size of Citibank, there's a danger in becoming dependent upon any one software provider. "They always have something unique that they bring to the table," Schechtman warns. "And the uniqueness is what you have to be careful with."
Thus, Citibank, let alone Citigroup, hasn't committed to an overarching SOA vendor strategy for the entire organization. "We, like most of the industry, are migrating rapidly to an open standards environment," Schechtman continues. "We're moving as much as we can to vendor-agnostic solutions, because with the advent of really low-cost hardware solutions running on OSs like Linux, more and more solutions are available today on a variety of hardware platforms."
But Schechtman is certainly a proponent of Web services for connecting disparate applications. As far as standards go, Citibank's technology group is moving toward Java. "We see the world being populated primarily by J2EE for enterprise applications," he says. "Microsoft .NET will be there, but J2EE will be there in greater numbers."
Accordingly, other popular open standards at Citibank include Struts, the Apache Software Foundation's framework for developing Java applications, and Tiles, a framework for assembling the presentation layer for software programs. Just as Apache's Linux-based Web servers have become the most popular on the Internet, open-source development tools are gaining in popularity within the business community.
Whether by open-source or proprietary tools, .NET or Java, SOA or point-to-point, at least one thing is clear: the plug-and-play benefits of SOAs and Web services promise to increase the pace of innovation in financial services.