Even as banks in the region are developing strategies to migrate to new platforms, mainframes continue to play an important part in their IT environments.
Kwai Seng Lai, consulting systems engineer, Asia-Pacific Data Center solutions, Cisco Systems, told ZDNet Asia in an e-mail interview mainframes are still being used in the back-end systems of most banks.
"A number of critical business processes are dependent on existing backend applications that are tightly coupled with the underlying hardware infrastructure. So there is a lot of complexity involved," he explained.
Simon Hayes, senior industry analyst at Frost & Sullivan, pointed out that generally, major banks have found their traditional infrastructure highly reliable and costly to replace.
"As a result, they have found it easier to keep what they have than make huge investments in new infrastructure," he told ZDNet Asia in an e-mail interview.
However, Hayes added, retaining legacy systems does create some problems for banks, such as making it more difficult for them to roll out new financial products, or cross-sell.
"For example, many banks find it [nearly] impossible to give customers a single view of their banking, share trading and insurance portfolios," he said.
According to Hayes, legacy systems are also typically very costly to maintain, and in some cases, there are skill shortages in maintaining particular systems. Given the highly competitive nature of the sector, banks "have little choice" but to address these issues, he said.
"Many small and nimble organizations are focusing on Internet transactions, offering customers convenience--something they often can’t get from established banks," noted Hayes. "If the big banks want to compete with these institutions, they need to have the infrastructure in place."
To keep the competition at bay, a trend among established banks is to retain their legacy core banking infrastructure, while building around it, the Web-based services that customers are demanding, like online and mobile banking, said Hayes.
Consolidation, virtualization on the rise
Cisco Systems' Kwai said in terms of connectivity, many banks are consolidating all their networks--ATM (asynchronous transfer mode), token ring, SNA (systems network architecture) and X.25 traffic--onto an Internet protocol (IP) infrastructure.
"Having an effective network strategy in place enables financial services organizations to become more customer-focused, increase profitability, enhance agility, reduce total ownership costs and address new business challenges," he explained.
There is also a drive towards consolidation and virtualization in the region, said Kwai, adding that FSI organizations are investing "substantial resources" to evaluate and implement virtualization.
Virtualization, according to Kwai, is attractive as it makes possible better utilization of the resources of a consolidated infrastructure, and therefore reduces wastage of unused capacity. It also allows the underlying resources like network, network services, servers, SAN (storage area network) fabric and NAS (network attached storage) volumes to be seen as a common resource pool.
Frost & Sullivan's Hayes pointed out, with virtualization, many banks are looking at simplifying their infrastructure and reducing power use--both for cost and environmental reasons.
"The National Australia Bank, for example, plans to use virtualization to reduce its server fleet from 500 to 20. Virtualization is of great interest to any large organization that is highly reliant on IT," he said.
Complexity, added Hayes, is also reduced by standardizing the operating environment, thus allowing the platform to be easily managed and enabling support staff to be easily trained. Such consolidation efforts help to reduce the total cost of ownership, he noted.
Source: Cisco Systems
