Making Good IT Investments

By Bob Violino  |  Posted 2009-07-28 Print this article Print

Server virtualization, self-service applications and service-oriented architecture give banks and other financial institutions the tools to increase their efficiency, cut costs and boost revenue.

Banks and other financial firms are looking for ways to increase efficiencies, cut costs and boost revenue. Three of the hottest technologies in the sector—server virtualization, self-service applications and service-oriented architecture (SOA)—provide opportunities to achieve those goals.

“Server virtualization is huge,” says Chris Howard, vice president and director of the Executive Advisory Program at Burton Group, in Midvale, Utah. “Almost every company is experimenting with it, and the percentage of virtual servers running in production is steadily increasing. The ability to pack more power into fewer physical boxes leads to data center consolidation and efficiency gains, while changing the power and cooling requirements and operator paradigm of the data center.”

Virtualization can reduce the cost of data center operations by leveraging infrastructure more efficiently and reducing the IT investment over time, says Rodney Nelsestuen, research director at TowerGroup, in Needham, Mass. It also benefits business continuity by allowing for failover capability, he says.

Self-service applications, such as online and mobile banking and payments, enable customers to perform transactions without the need for direct interaction with a bank employee.

“Financial institutions are finding that more customers and market segments are seeking self-service options,” Nelsestuen says. “The desire to access information, conduct transactions, and perform other financial actions in an asynchronous fashion—at any time convenient to the customer—and through multiple channels is driving the adoption and growth of self-service channels.” In addition, he says, when a customer uses self-service channels, the costs of providing that service are lower than in human interactions.

SOA is less likely to be noticed by customers. This services architecture allows firms to use and reuse information and data from underlying core and secondary systems in delivering common functionality to new products, services and channel options, Nelsestuen says. “SOA is essentially a modernization scheme without changing out the underlying systems and applications, and which customers never see or touch, other than to experience the benefits if an SOA implementation and ongoing migration are well done,” he explains.

Enterprises that succeed with SOA are “master measurers,” and work diligently to build business cases for their SOA initiatives and prove ongoing ROI, says Burton Group’s Howard. “However, many other organizations never get past the conceptual stage and the first couple of implementations,” he adds. “SOA is often misunderstood as an integration architecture, but that is only part of the story. SOA requires a service vision of the organization: a vision that clearly understands and normalizes capabilities and processes in the business domain, then applies technology to support those capabilities and processes.”

Here are examples of how financial services firms are leveraging these technologies to improve their business.


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