Absa, Standard Bank contribute to global SAP network defining banking IT services

Two of South Africa's big four full-service banks, Absa and Standard Bank, will form part of a global banking network established by business solutions giant, SAP AG, to help the banking sector more effectively exploit a fundamental shift in information technology (IT) to service-oriented architecture.

ABN Amro, Barclays, Banco Bilbao Vizcaya Argentaria (BBVA), Credit Suisse, Deutsche Postbank and ING - collectively with Absa and Standard Bank representing tens of millions of customer worldwide - will also participate in what is being called the Industry Value Network for Banks.

Service-oriented architecture (SOA) does away with the need to write new programs every time an organisation wants to change the way it operates. It achieves that by breaking down business software applications into their component parts or 'services' so that they can be re-composed to suit the business process required. It also creates standard interfaces among the services, making it much easier to assemble what the business requires.

SOA therefore enables an organisation to change its operational processes quickly, affordably and with minimum disruption. And it enables easy integration among different technology systems and platforms. It therefore holds the promise of enabling banks to be much more adaptive to rapidly changing market conditions.

But, as SAP Africa's general manager financial services, Lloyd Chisholm, explains: "Having SOA on its own is like being able to place a call between Johannesburg and Japan - but not being able to communicate because of language differences. SOA does not contain commonly accepted business semantics that describe what happens within business processes such as, for instance, create a client or do a credit check. Some process definitions can, of course, be generic to all sectors. But within an industry as specialised as banking, it's necessary to get agreement on definitions of industry-specific processes so that different banks - and departments within banks - can communicate easily with one another.

"That's what the Industry Value Network for Banks is geared to do - and in the process the participating banks, like Absa and Standard Bank, will be able not only to influence the direction of the banking industry but also the direction of IT in banking."

"Banking IT systems have become increasingly complex and intractable as layer upon layer of functionality has been added over the years. The challenge now is to deconstruct the inflexibility in a risk-averse, non-disruptive, cost-effective way in order to achieve greater differentiation on the outside and greater simplicity on the inside. SOA makes that possible from a technical point of view and SAP ESA and the Industry Value Network will make it possible from a process, content point of view."

SAP has been in active in the SOA arena since 2003, becoming the first solution provider, through its Enterprise Services Architecture (ESA) framework, to propose definitions for the 500 most commonly-used enterprise services. It is also the first to enable, through its Industry Value Networks, collective innovation across specific industries that will facilitate solution creation and deployment.

During the next five months, C-level executives and chief architects from up to 30 international banks will gather in three workshops to refine a repository of those services critical to enabling banks to reuse, interoperate and integrate the offerings of IT providers more easily into their existing landscapes. SAP is in the process of incorporating these services into its banking-specific solutions.

"But SAP is not the only solution provider that will benefit," Chisholm says. "Because ESA runs on SAP's NetWeaver technology integration platform, it provides a foundation for co-innovation by independent software vendors (ISVs), systems integrator (SIs) and banking customers. They can leverage SAP's application and infrastructure technology to build new solutions to meet the 'white spaces' in today's banking solution map."