The Next Generation Banking Solution

- SOA Based

International Group
Institute for Information Industry (III)

2007/11/01

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 Contents
 Milestones of III Banking Business Development
 e-Banking Requirements and Challenges
 Trend for the Core Banking System Renewing
 III Advanced Open Banking System
 III SOA based Core Banking System

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 Milestones of III Banking Business Development
 Formed “Banking Automation Project Team” on 1st March 1979
 Jointed developed the Core Banking System with the First
Commercial Bank and launched in Dec. 1981
 Developed the Core Banking System in Unix platform in 1989
 Jointed developed the 2nd generation Core Banking System with
IBM Taiwan in 1994
 Penetrated into China Core Banking System market with
IBM 、 Bull and Tadem in 1994
 Developed the 3rd generation Core Banking System (Java
based) in 2004

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 References in Taiwan
 First Commercial Bank
 Chiao Tung Bank
 Shin Kong Bank
 Macoto Bank
 Land Bank
 Chunghwa Post Co.
 Kaohsiung Bank
 Union Commercial Bank
 Farmer’s Bank

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 References in China
 Post Saving Burau(42 Provinces and cities)
– Dalian 、 Hainan 、 Hefei 、 Nanchang 、 Xining 、 Guiyang 、 Lanzhou 、
Taiyuan Xiamen 、 Fuzhou 、 Quanzhou 、 Chengdu 、 Harbin 、 Xiangfan 、
Huangshi
– Liupanshuishi 、 Hengyang 、 Zunyi 、 Wuhu 、 Sichuan 、 Fujian support center
– Shenyang 、 Luoyang 、 Xinxiang 、 Datong 、 Linfen 、 Sanming 、 Nanping
– Changzhi 、 Chongqing 、 Kunming 、 Huhehaote 、 Handan 、 Lasa
 Back of China － TPE site license contract
 Agriculture Bank of China
– Shanghai Pudong 、 Shangjai Pusi 、 Beijing 、 Jiangsu 、 Jinan
 Bank of Communications
– Hangzhou 、 Shantou 、 Zhongshan 、 Wuhan 、 Guangzhou 、 Chengdu 、
Tianjian
 Industrial Commercial Bank of China － Tianjian branch
 City Commercial Bank
– Shanghai 、 Nanjing 、 Qingdao 、 Jinshan 、 Nantong 、
– Leshan 、 Luzhou 、 Deyang 、 Panzhihua
 China Minsheng Commercial Bank － Shanghai branch

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 Contents
 Milestones of III Banking Business Development
 e-Banking Requirements and Challenges
 Trend for the Core Banking System Renewing
 III Advanced Open Banking System
 III SOA based Core Banking System

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 e-Banking Service Requirement
24H 24H
Call Center Automatio
n

Holiday Counter
Counter On-Line
24X3 65
Non -sto p
Serv ice Counter
Center Delay
cut Service
Center
Multi
Balance Batch
Control
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e-Banking Service Requirement - Multi-Channel
POS
ATM Internet Banking
CDM (Virtual) ATM
KIOSK

Service workstation
Branch Teller
Multi-Channel Mobile Phone
Voice Phone
Direct sale workstation Service
Executive workstation
Call center

IC Card FISC
Check JCIC
Passbook NCCC
Credit/Debit Card VISA/MASTER

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 Challenges from Market Competition(1)
 New technology is booming
– Open system vs. proprietary system
– New delivery channels are added
– Consistency of service offering across delivery channels
 Increased customer expectations
– Premium value added services across delivery channels are
looked upon as a necessity
 Increased competition
– Challenge in new customer acquisition & customer retention
– Reduced time to market for new products & services
– Profitability analysis across delivery channels & products
– Mergers & acquisitions are becoming a norm in banking industry
(People, Processes, Technology & Data)
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 Challenges from Market Competition(2)
 Decreased profit margins
– Cutting costs will be the trend
– Low operations & recurring costs are importance
– Increase in volumes has become key to make more profits
 Risk Management
– Control and track the Non Performing Assets
– Alert potential NPAs in advance
– Basel II

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 Contents
 Milestones of III Banking Business Development
 e-Banking Requirements and Challenges
 Trend for the Core Banking System Renewing
 III Advanced Open Banking System
 III SOA based Core Banking System

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 Drivers for Core Banking System Renewing
Common Drivers
Flexibility Need a flexible system to support launching new products in time
:
Quality: To handle the increasing transaction volume. If current system can not
process stably, it’s obvious the system needs to be renewed.
Costs: Incurring higher system maintenance and operating costs
Agility: Requiring the ability to respond to urgent business needs
Analytics: Demanding increased sales support, customer analytics and propensity
modeling capabilities

 Other Drivers
– Solution and Vendor Viability
– Questionable Scalability
– Diminished Operational Efficiencies
– Cross-System Incompatibility
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 Framework for Core Banking System Renewing
Assessment Construction Management
Phased Project
Identify Business Goal IT Governance
Implementation

Business Process Review Infrastructure Construction

Applications Management
Requirement/Change
Target Organization Management
Assessment
IT Portfolio Management
System Integration
As-is Applications
Assessment
Quality Assurance Technical Investment
Buy or Made Evaluation
Decision
Transition Management

Prioritize the Requirements Key Performance Indicator

Operation Procedure
Development
Multiple Years
Construction Plan Build up Technical Capability Service Level Management

Experienced Consultant Technical Transfer Processes and Tools

Project Management Strategic Planning

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 Key Success Factors (1)
 Business goals orientated
– Begin with the business objectives
– Know where you are, identify:
• Affordable Budget
• Operational resource (technology and human skills)
• Market and competitive status, …
– Know where you wish to go to achieve business objectives
• Creating a vision of the future that places the bank in its optimum position
to succeed
– Identify the business drivers and align to them with architecture
and technology

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 Key Success Factors (2)
 Experienced technology partner
– Setup a long term relationship with experienced technology
partner
– Partner selection should include these criteria:
• Standards commitment
• Sourcing suitability
• Reference site qualifications
• Service-Oriented ability
• Willing to provide the technical transferring

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 Key Success Factors (3)
 Suitable solution
– High availability and scalability
– Meet the local functional and regulatory requirements
– Deliver effective MIS reporting
– Low initial investment and recurring investments
– Reasonable Total Cost of Ownership (TCO)
– Protects bank’s investment in the long run

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 Contents
 Milestones of III Banking Business Development
 e-Banking Requirements and Challenges
 Trend for the Core Banking System Renewing
 III Advanced Open Banking System
 III SOA based Core Banking System

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 Scope of the Core Banking System
 Core banking systems form the basis of the retail bank’s IT platform
 Core Banking System provides
– Deposit processing
– Consumer loan and mortgage processing
– Special loan for the specific purpose
– Payment service
– General ledger
– Customer Information Management
 Banks make these services available across
– Branches
– ATMs, kiosk
– Call centers, interactive voice response (IVR)
– Internet banking

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 III Advanced Open Banking System

CBS
(Core Banking System)

TPE Platform
(Transaction
Process
FEP
(Front End Processor) Environment)

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 System Overview
Services Delivery Channels

CBS FEP
Telephone Mobile Phone ATM
Other TPE
Systems
Unix
POS Browser Kiosk

Enterprise Application Integration

External Connectivity
Firewall

Branch Branches
WEB Branch International Organizations
System

Pin Pad/MSR Pin Pad/MSR

Domestic
Passbook Passbook Organizations
Printer Teller Printer Teller
Workstation Workstation
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 Solution Features(1)

 H/W﹑S/W Independent - OPEN

 Ensure the system portability
 Best IT cost/benefit strategy
 Multi layer Parameter Driven
 Application modularize design
 New products definition flexible
 Multiple transaction
 Multiple DB access API

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 Solution Features(2)

Customer Information Management

integration
Multi-currency and overdraft limit
account management
Full function customer service
24X365 non-stop service
Multi-Channel Service

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 Solution Features(3)
Centric integrated accounting system
Support Multi-Currency Accounting
Support profit center accounting
Support multiple transaction
Real time accounting balance
Fully Supervisor Control Management and
Financial Statements
Commit BASELII risk model required
information

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e-Banking System Component -TPE

TPE Platform
Transaction
Process
Environment

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 TPE Developing Roadmap
TPE III
Java
Release
Component based
Architecture TPE III
αTest
Client-Server
Distributed
Architecture TPE II/XENIX
TPE II/UNIX TPE II/ZOS
Centralized
Architecture
TPE/UNIX
UCP/UNIX
TPE/OS400
UCP/CICS TPE/CICS

1980 1993 1996 2004 2005 2006

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 Structure of the TPE

Cobol C
Application System Application System

TPE

DBMS Data Communication

Operating System
Hardware

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 TPE II Features(1) TPE II Distributed Processing
TPE multi-domain architecture
Domain 1 Domain 2
AP AP

SQL TPE API SQL TPE API

TPE TPE
FCS FCS
DB Lib TM CRM DB Lib TM CRM
XA XA+ XA XA+

DBMS DBMS

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 TPE II Features(2)
 Support dual-TPE architecture for 24*365
 Support multiple hardware platforms
– IBM AIX machine
– SUN Solaris machine
– HP UX machine
 Support multiple DBMS
– Oracle
– DB/2
 Provide a friendly application development environment
 Protect the investment on the application systems

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 Transaction Flow
TXN Request Branch TXN Output
System

TPE
TXN mgn & monitor
input output
invoke the AP
processing processing

TPE API
• Input data check •RDBMS/File access •Output data edit
• Format convert •Common Data Area access •Format convert
• Validation check •Txn output
•Txn Logging
•Access txn log
•Request for batch online
•Reverse txn processing
•Request for RENDO
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e-Banking System Component -CBS

CBS
Core Banking System

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 CBS Characteristic

 Parameterize
 Structuralize and Modularize
 G/L system cover all application and currency
 Centralize Customer Information Management
 24X365 non-stop servicing
 Security control module
 Standing order and Center cut servicing

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 TPE/CBS Framework
CBS

Multi-Currency Acct. Funds Transfer

Customer Mgt.

Common Module

Other Transactions
Credit Mgt.
Remittance
Deposits

Loans

F/X
Credit Line Def.

Interest Parameter DB Network

Module Module Module Module
Transaction Monitor
Management Administration

TPE
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 CBS- Common Module
Operation Management
Branch Operation Management
Branch On-line Log ON/OFF
Workstation Log ON/OFF
Off-line/Re-send/Outer-Register Management
Training Mode Management
Teller Cash Control
File Up/Down Load
Common Process Module
Common Data Inquiry
Accounting Type Balance
Interbranch, Receipts/Payments Balance
Teller Accounting Balance

Customer Information File Management

Customer & Guarantor Basic Data Management
Customer & Guarantor Basic Data Inquiry
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 CBS- Saving Deposit
Saving Deposit-Corporate
Saving Deposit (Regular)
Pre-Paid Account
Omnibus Accounts Deposits(A)
 Saving Deposit-Personal
Saving Deposit (Regular)
Employee Accounts
Government Employee Accounts
Special Accounts
Omnibus Accounts Deposits(B)
 Employee Deposit
Employee Accounts
Retired Employee Accounts
 Financial Institution Deposit
Local Banks Deposits
Foreign Banks Deposits
 Foreign Currency Saving Accounts
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 CBS- Checking Deposit
Regular Checking Account
Regular Check Deposit
Checking Deposit (with overdraft line)
Interest-bearing Check Deposit Account
Fix-Amount Checking Deposit Accounts
Checking Account (with overdraft line)
Checking Account (Fixed Amount)
Checking Account (Fixed Amount, With Served overdraft line)
Checking Account (Fixed Amount, Served Credit/overdraft line)
Employee Account (Fixed Amount, Served Account)
Bank Deposit
Local Bank Account
Local Bank Overdraft Account
Local Bank Auto Transfer Account
Local Bank Interest-bearing Auto Transfer Account
Foreign Banks Accounts
Foreign Banks Overdraft Account
Bank Check Accounts
Insured-Payment Check (Certified Checks)
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 CBS- Time Deposit
 Time Deposit
General Time Deposit
Transferable Time Deposit Certificate
Time Saving Deposit
Special Time Savings Deposit
Lump-Sum Principal with multiple Interest/Payments Savings Deposit
Multiple Principal deposits with Lump-Sum Payment Savings Deposit
Fixed Amount Deposits with Lump-Sum Payment Savings Deposit
Fixed Amount Deposits With Multiple Payments Savings Deposit
 Foreign Exchange Time Deposit
 Foreign Currency Time Deposit

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 CBS- Loan

General Loan (Loan-term/Secured, Unsecured)

Consumer Loans
Home Mortgage Loans
Others
Export Loans
Foreign Currency Loans
Loans Secured With Time Deposit Certificates
Guarantor Operations
Overdraft Loans
Foreign Bills Cleaning
Collection/Uncollectible Accounts Processing

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 CBS- Remittance
Interbranch Remittance
Telegraphic Transfer (Credit to account)
Non-credit to account
Bills of exchange
 Interbank Remittance
Regular Credit to account
Interbank Remittance
Rejected Remittance
Central Bank Remittance
General Information/Message
 International Remittance
Import/Export Loans
Foreign Check
Emigration/Study Abroad Remittance
Foreign Laborer Remittance

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 CBS- FX (International Business)

Import Foreign Exchange

Import L/C operation Outward Remittance
Import Bills Processing Outward Remittance
Import Bill (For collection) Travelers’ Checks
Other Service operation Inward Remittance
Foreign Currency Change
Export Clean Bills for Collection
Clean Bills Purchases
Export L/C operation Inward Remittance
Export Bills processing Withhold/Stop payment
Export Bill (For collection) cash Mgt
Export Document Bills Other
Service/Information

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 CBS- Accounting

Multiple-Accounts Auto-created online accounts

Auto-created interbank operation accounts
Funds Control Operation
Deposits(same branch)/(other branches-same bank)
processing
Interest accrual Financial Reports, Analysis reports
Media Application Processing
Back-up/Inquiry Operation

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e-Banking System Component -FEP

FEP
Front
End
Processor

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 FEP － System Architecture
HOST-CBS
Switching
Center
(FISC)
FEP Security
Module

Terminal
VISA/MASTER

Security
Routing

System
COMM
TX Mgt.
Certification

Mgt.
Mgt.

Mgt.
Ctl.
TX
Center

Gateway Gateway Gateway

Authorize Units
HOST

Teller W/S Self-service ATM Self-service POS Browser Telephone Mobile

Branch Terminal Phone

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 FEP － Feature & Advantage
24H non-stop operation
 On-Line Mode, Copy Mode, Off-Line Mode, Re-entry Mode
Front End Processing
 Interbank online transaction process-Bank Card, Smart Card,
 ATM Withdraw, Transfer, Interbank Remittance, Credit Inquiry,
 Payment, International Bank Card…
 Agent service gateway-ATM payment, Utilities payment
 Call Center 、 Voice System 、 Internet Banking 、 FX System 、
 Trust System…
Auto-service devices connection and real-time monitoring
 ATM, CDM, POS, APM, KIOSK …

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 FEP － Feature & Advantage
Security Control
 H/W DES connection
 Comm decode/encode for connected system (FISC 、 NCCC….)
 Auto devices comm decode/encode
 Bank Card 、 PIN Letter Process
Share Host Processing Loading
Dual Host + Disk Array
 Backup Host also support testing and application develop
 Dual HOST backup via Disk Array
 Highly Security and Reliability

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 FEP － Feature & Advantage
RDBMS file System
 Oracle, Informix, Sybase, …
 Variety Inquiry/Reporting
Interbank Remittance System
 Store and Forward design
 FEP multiple outward Remittances
 FISC multiple inward Remittance
 Multiple inward remittance server

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 FEP － Feature & Advantage
Modularize/Layer structure design
 Simple structure,easy maintenance
 Each layer/application fully independent
 Horizontal upgrade
Multiple Instances
 Multiple transaction process
 Increase system performance

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 Contents
 Milestones of III Banking Business Development
 e-Banking Requirements and Challenges
 Trend for the Core Banking System Renewing
 III Advanced Open Banking System
 III SOA based Core Banking System

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 What is SOA?

… a service? … service orientation?

A repeatable business task – A way of integrating your

e.g., check customer credit; business as linked services
open new account

… service oriented architecture … a composite application?

(SOA)?
A set of related & integrated
An IT architectural style that services that support a business
supports process built on an SOA
service orientation

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 Vision of SOA
 Business & IT Alignment / Agility
Business IT

Business
Analyst

• Social environment Process • Systematic structure

− Organization Administrator − Hardware
LOB Process
− Employees Owner − Software
• Constantly changing Process • Desire to minimize
external influence Architect frequency of change
• Need to change Business • Able to implement
process daily/weekly Engineer process change in
Developer
months
• Highly dynamic
environment • Stable & tested system
• Measure Profitability • Measure : Service level
Business
End User

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 Business need Flexibility and Reusability
Traditional Business*
 Economics: globalization demands flexibility

– Business processes: changing quickly

– Information: greater availability

 Growth: at the top of the CEO agenda

 Reusable assets: can cut costs

Today’s World-Class Business*

*Sources: CBDi

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 Barriers to Business Flexibility and Reuse

 Lack of business process

standards
 Architectural policy limited
 Point application buys to
support redundant LOB
needs
 Infrastructure built with no
roadmap

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 SOA Reference Architecture

Channel B2B
Service Consumer

Consumers

QoS Layer (Security, Management &

Integration (Enterprise Service Bus)

Monitoring Infrastructure Services)

Data Architecture (meta-data) &

Business Process

Business Intelligence
Composition; choreography;
business state machines

Governance
Services
atomic and composite
Service Provider

Service Components

Packaged Custom OO
Application Application
Operational Systems Application

Atomic Service Composite Service Registry

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 Framework of the SOA based Core Banking System

Software Engineering Tools

Global Core banking Applications
Best
Practice
Core banking Application Platform

Business Innovation & Optimization Services

Development

Management
IT Service
Services

Interaction Process Information

SOA Services Services Services
Architecture ESB
Partner Business APP Access
Services Services Services
Infrastructure Services

H/W, Infrastructure

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 SOA_Based Core Banking Realization of III

Integration & Tx Service

Monitoring Service
Security, Management &

Data Access Service

business processes
(process choreography)
Saving
Open Account

Withdraw Deposit

services
atomic and composite
Account Interest CIF  Interest Authorize Credit Limit Session
Balance Rate Magnt Cal. Magnt Management Management
Component

Log
service Transaction
Mgmt.
Component

components Common Component Data Access

IInterface

Module Audit
Saving Component

AP Module Event Persistence

Notification Service
Component
operational systems Permissions
Component

Queue
Mgmt.
Component

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 Benefit of the SOA based Core Banking System
 New core banking system which
– Comply with market requirements and management environment
– Align with further growth strategies and technology trend
– Take the advantage of OPEN system for reasonable TCO
 Improve the flexibility of system maintenance and quality
– Quick Reaction to the market requirement
– Easy to maintain
– Capitalize the software asset with the reusability feature
– Open technology, standard & availability of resources in the
industry

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Thank
You

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