A number of technologies have promised to reshape and revolutionize the financial services industry over the last five years. But John Petrey, chief information officer of TD Banknorth, a Portland, Maine-headquartered bank with 600 branches, didn't need a revolution. He needed an answer to an old, familiar problem—integrating and getting more value out of existing systems.

And he's far from alone. While a number of promising technologies, such as banking cards with smart chips or cash cards with radio frequency identification (RFID) transceivers, have fizzled, one technology appears to be making a dramatic impact in the financial services sector: service-oriented architecture (SOA). Banking giants such as Bank of America and Wachovia, as well as other financial services leaders like Merrill Lynch and Charles Schwab, are finding that SOA is not only solving many of the challenges they face today, but is a technology they can bank on in the future.

There are varying definitions for SOA in the industry, but the overriding premise is that SOA is a computing architecture that allows an enterprise to make its applications and computing resources, such as databases, available as "services" that can be called upon when necessary. SOA leverages standard mechanisms, such as eXtensible Markup Language (XML), to simplify the process of exchanging data.

In an industry like financial services, it means a bank can take an existing legacy application, such as a program for compiling client account statements, and make that application available as a service that can be accessed by other applications. If the bank wants to make that "client account statement" service available in an online banking application, for example, it taps into the existing service rather than create a new application. Enterprises can create entire libraries of such services, which can then be used like electronic building blocks to speed application development.

The industry has particularly taken to SOA because it has a huge investment in battle-hardened legacy applications, and because a flurry of mergers and acquisitions has created major integration headaches.

"When you invest in any given technology, you are essentially placing a bet," says Banknorth's Petrey. "You're betting that the technology will be a survivor and that it will deliver a payoff to the business. My conclusion [after working with SOA for three years] is that SOA is absolutely a technology worth betting on."

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