IT innovation: any good for banks?

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28 March 2009
During interactions with banks it is becoming more frequent the request to organize regular internal workshops to talk about IT innovation and future programs The purpose of these workshops is to create a discussion forum among banking stakeholders, by injecting items for discussion on how, and when, will new technologies affect the banking business I have identified a number of items that deserve attention and further investigation, trying to assess the impact they will have on the business of banks going forward. SOA This loosely coupled modular services layer exposes the IT core system to the expanding number of front end solutions, and enables the orchestration of various back end services to create new products and processes. The most significant impact it is already having on the banking business refers to the implementation of payment gateways. Model-driven development (SOBA) This technique translates business models into executable components. We have already seen an application of it with a Trade Alerting Portal Solution adopted by ABN Amro Grid Computing The technique of sharing networked resources has a potential impact on the banking business in the support of the analysis of transactions, both within a single bank and between organizations, for AML purposes Green IT Dematerialization, virtualization, and mobile are the watchwords. We see a growing attention of banks to this innovative subject. HSBC’s "Climate Confidence Index”, and the “Green Globe Banking” award are but two examples. E-invoicing and Payment platforms The benefits of dematerialization can be further extended within the banking business through the implementation of a Collaborative Infrastructure. A unique platform that integrates information, physical and monetary flows on behalf of communities of interest (e.g., supplier consortia; regional industry districts; municipalities), which become themselves part of the infrastructure to provide services to other constituents. Agent-based modeling It is a technique based on software components, which continuously run, exist as semi-autonomous entities, and perform various activities for the completion of a transaction. In banking we see its application in the creation of a dynamic model of liquidity provision in a payment system (RTGS). SaaS (software as a service) It can turn into a fully hosted online banking and bill payment functionality across multiple channels (e.g., mobile devices, ATMs, kiosk, teller stations and contact centers). Social lending The application of Web 2.0 technologies and models in the banking business has already surfaced with Zopa, an exchange platform where people lend and borrow money with each other, sidestepping the banks. Co-creation A collaborative process facilitates the development of highly customized enterprise technology solutions, balancing between off the shelf and a completely customized solution. For banking, this means the possibility to build a solution for commercial and small business lending that processes and manages loans of all sizes. Event-driven supply chain finance Identify events in the physical supply chain that trigger correspondent services in the financial supply chain. Turning this into the banking world means the provisioning of supply chain finance services based on product lifecycle events.

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