Management Strategies

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Nancy Feig
Nancy Feig
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Pursuing the Promise of SOA

Though service-oriented architectures have the potential to improve IT integration and business agility, the lack of standards is hindering widespread adoption of the strategy in banking. But that's not stopping some institutions from pursuing the promise of SOA.

It's probably not fair to refer to service-oriented architecture (SOA) as a buzzword. (For one thing, it's three words.) After all, few would disagree that SOA forms a legitimate IT strategy that is providing banks across the world with real value.

SOA promises to improve an organization's IT efficiency -- and, subsequently, business agility -- in many ways. By targeting reusable services, SOA drives the deconstruction of operating silos, improving IT/business alignment, and speeds the development of new products and services, allowing banks to bring new offerings to market more quickly.

In addition, SOA is extending the life of banks' legacy systems, notes Bart Narter, an analyst with Boston-based Celent. SOA allows banks to create a "wrapper" around systems, which then enables the organizations to address service-oriented requests to legacy systems, essentially modernizing the existing applications, he explains, adding that SOA can help banks put off core system replacement.

But SOA isn't necessarily a tangible technology with a concrete definition. Rather, according to experts, SOA is an approach to enterprise IT. Industry research firm Celent defines SOA as "a set of loosely coupled modular services to support both business and IT requirements."

Further, the approach, while on most banks' radar screens, is relatively new, according to Narter, who says adoption of SOA has been limited predominantly to large international banks. "This isn't SOA 2.0," he says, adding that the banking industry has not made any monumental innovations or huge leaps when it comes to adopting the architectural strategy.

"Most large banks have used [SOA] in some way, and now it's even moving down-market," Narter acknowledges, pointing out that "[SOA] is a fairly effective way to integrate [systems and services]." Still, he adds, "It's not 100 percent mature. But it's no longer virgin territory, [either]." According to Narter, "Much more virgin territory is the industry frameworks, specifically for banking."

According to Narter, much of the "plumbing" to support SOA is in place at banks across the globe. The emerging components that are going to push banks' SOA initiatives to the next level, he asserts, are the "prebaked systems," or SOA frameworks, that many vendors are now offering.

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