IT Governance in Banks workshop USAID Finance for Economic Development (FED) Program

1. USAID Finance for Economic Development
(FED) Program
WORKSHOP : “ I T GOV E R N A N C E I N B A NKS ”
MAY 27, 2014

3. The Impact of IT on Banking
John Schlesinger, Chief Enterprise Architect, Temenos
May 2014

4. 4
Topics
Introduction
Banking drivers of change
Four revolutions in Banking
New Banking architecture
Why Shared Infrastructure
Enterprise Platform
Banking Software as a Service
Projecting Bank APIs
Conclusion

5. Presentation Messages
Banks are going through four revolutions all of
which have IT implications
Banks need a new architecture for real time
Banks will need shared infrastructure for all
systems, Software as a Service for Core Banking
We think that all new core banking initiatives will be
in shared infrastructure by 2020
5

6. 6
Food for Thought
Some bankers and analysts think
that Google, Facebook, Amazon or
the like will not fully enter a highly
regulated, low-margin business
such as banking. I disagree. What
is more, I think banks that are not
prepared for such new competitors
face certain death
Quote from article ‘Banks need to take on Amazon and Google or die’ CEO of BBVA

7. Owned
Business
System
7
Internal Use Cases
Banking Drivers
ANALYTICS
Partner
Business
System
MODULARITY
Partner
Business
System
Events In
Events Out
External Use Cases
MOBILE
REGULATION
INTEGRATION

8. Four revolutions in banking
Banks are becoming online retailers
Banks are in a new regulatory regime enforcing low
margins
Core banking is a commodity and on shared
infrastructure is the cheapest place to run it
Customers are no longer loyal
The future is very uncertain, small competitors are very likely
to replace even today’s largest banks
8

9. New Banking Architecture
This banking value chain will splinter
Front Middle Back
Customer
Arrangement
Mobile
Order
Brand
Enables banks to establish a banking marketplace for their
customers
9
Orders
Execution
Holdings
Settlement
Channels
Product
Clearing
Internet
API
Advisor
Counterparty
Product
Execution
Risk
Account Holder
Account
Clearing
Compliance

10. Running the Value Chain
Different banks may implement different parts
Channels Front Middle Back
Do soTmhaenthki nygou SomDeitdh iint g to do Something done
Temenos wants to provide this architecture both ‘front to back’
and as component instances
10
Orders
Execution
Transactions
Holdings
Reports
Settlement
Channels
Product
Clearing
Finished

11. Justification of Shared Infrastructure
Dennard scaling fails
By 2020 multi-core fails
‘dark silicon’
We are moving back to workloads on servers, not servers for
workloads
11

12. 12
Database
Application Server
Cubes
Key
Banking Platform
API (B2C) Gateway
Req
Resp
Activity
Req
Resp
In Out
ESB
To be
Done
Done
Done
To be
Done
CEP MDM
To be
HDFS
Done
To be
To be
Done
Transaction
Row
Data
Integration
Application
Integration
Done ODS
DWH
Domain
Service
ETL
B2B Gateway - BizTalk
To be In
Report Column
The Banking platform requires middleware –
ESB, B2B, B2C, API, AS, ETL and DBMS

13. Software as a Service
Shared stateless binaries but multiple databases
13
Service
Manager
Bank
Users
Bank
Customers
Multi-Tenant
Meta Data
Core Banking
Bank A Bank B Bank C [Co C1] [Co C2]
Multi -Tenant
Management
The Shared Infrastructure can run SaaS with this architecture
for multiple independent banks at lowest cost

14. Complete Banking Service
14
Design Deploy Monitor
Integration Interface
Four R
Interaction Interface
SaaS BPO
Core Banking
SWIFT
ISO 8583
Hi Payment
Regulatory
Risk
GL
DWH
COB
Reconciliation
Lo Payment
Mandates
Credit Cards
Internet Mobile Teller Advisor BPM Recon
Payments
Card Mgt
Statements
Workflow
Content
Case
Reporting
CRM
ISO 20022
Four R
Orders
Holdings
Clearing
Settlement
Any Enterprise
Banking

15. Projecting Bank APIs
15
Banking App Store
Banking
Capability
Other
Banking
Capability
Non banking
Capability
B2C Framework

16. 16
Food for Thought
By 2015, more than 50% of
public Web API
deployments will be to
improve digital customer
experience as an even
more important priority than
net profits
Quote from ‘API Deployment Models That Accelerate Digital Banking’
4 March 2014 Gartner

17. 17
Conclusion
Banks have to become low margin high volume
providers in the middle and back office
Banks have to become high care in the front office
This will cause the banking value chain to splinter
This will lead banks to shared infrastructure for core
banking

18. Thank You