Jack Henry Shop Adopts Banking Framework from IBM
April 6, 2010 Alex Woodie
Whitney National Bank, which recently signed a contract to install the Silverlake core banking system from Jack Henry & Associates, is adopting IBM‘s Banking Industry Framework, IBM announced earlier this month. By adopting the framework, Whitney National will get access to decades-worth of IBM experience in the banking sector, which will better prepare the bank to adapt to existing and expected regulation, as well as customers’ evolving expectations.
Whitney National Bank is a publicly traded bank with $12 billion in assets. From its headquarters in New Orleans, Louisiana, it operates more than 160 branches in the five-state Gulf Coast region that spans from Texas to Florida. It is the biggest bank in the state of Louisiana, and it recently committed to install Jack Henry’s Silverlake software running on in-house System i servers.
Whitney National has just begun the consultative process that’s part and parcel of the Banking Industry Framework, so it’s too early to identify hard benefits realized by the bank, according Steve Kopelic, who heads up the customer care and insight domain within the Banking Industry Framework offering.
Just the same, Kopelic was kind enough to provide IT Jungle with an overview of types of benefits that banks like Whitney can expect to gain by using the Banking Industry Framework, which is one of 17 such industry-specific frameworks offered through IBM Global Services.
Inside the Banking Framework
In its most basic form, the framework consists primarily of content, such as descriptions of banking industry best practices compiled by IBM experts working in the field. The content is delivered via software. IBM’s broad goal with the framework is to help banks migrate over time to more open standards. This means a good dose of service oriented architecture (SOA) and strict adherence to international accounting and reporting standards for the financial services industry, Kopelic says.
Kopelic likens the framework to a set of blueprints. “If you were remodeling your house, you’d want to know what are all the possible alternatives and options you have. What are the different materials that I could work with? What are the restrictions or caveats if I choose this kind of countertop versus this type? The models are sort of the embodiment of all of that knowledge we’ve gained from working with customers over a 20-year period,” he says.
In this manner, the framework lives at the intersection of technology, people, data, and processes. “One of the things our framework allows us to do that appealed to Whitney, was to be able to look at a workflow with associated activities and to be able to understand the linkage from those actives down to individual business services, and to see the linkage back to the data side,” Kopelic says.
This gives banks the capability to identify similarities between multiple business processes, and to apply consistency and eliminate redundancy across those processes.
For example, banks often want to share business logic across different activities, such as opening a checking account or opening a loan origination, because it can reduce complexity and speed development work. “That helps to inform you where business services could actually be reused, or where there is a legitimate need for them to be different,” Kopelic says. “The notion of reuse and consistency is really big in the banking industry these days.”
Achieving consistency across different channels is another important aim for banks these days. If a person asks a bank the same question, such as “What is the interest rate for a par 30-year fixed rate mortgage?” across three different channels–such as the bank’s Web site, the bank’s 1-800 number, and an actual branch of the bank–they should get the same exact answer each time.
They should get the same answer, but too often, they don’t. “The reality is, not many banks can do that today very effectively,” Kopelic says. “That’s another area our framework is helping them to grasp.”
Repeatable, But Not Cookie-Cutter
There is nothing System i-specific about the framework, and IBM takes a somewhat agnostic approach to whatever technology stack the customer is using. “We understand the reality of the banking industry today, that there’s a diverse array of platforms and vendors and applications,” Kopelic says. “There are hundreds or thousands of different software vendors that serve the industry. Our intent is to be able to work within the reality of what banks have today, but that over time to make the environment less complex. So we help them to follow open standards, but also drive re-use and consistency as much as possible.”
While change is the goal, the approach is slow by design. “The framework is designed to do this in a phase-by-phase manner, what we call ‘progressive renovation,'” Kopelic says. “Banks like this idea that they don’t have to do this big monolithic forklift upgrade or replace everything they have.”
IBM will make technology, product, and business process suggestions to banks, which they may take or ignore, Kopelic says. But at all times, the framework aims to achieve a balance between being too “cookie cutter” on the one hand, and too custom-developed on the other.
“We’ve looked where there are repeating patterns of delivery where we can come to customers with subsets of that content and provide them with a good starting point, as opposed to the old bill-of-material approach, where the customer has a lot of software products they have to put together and integrate on their own,” Kopelic says.
For more information on IBM’s industry-specific frameworks, see www-2000.ibm.com/software/data/industry-models.
This article was corrected. Whitney National Bank is not yet using Silverlake from Jack Henry & Associates. The implementation, first announced in May 2009, is not expected to go live until mid 2011. IT Jungle regrets the error.