1. technology and computing

Banking Industry
Architecture Network
White Paper
Cloud enabling
the Banking Industry
Cloud enabling the Banking Industry
Organization
Authors
Role
Name
Company
BIAN Lead Architect
Guy Rackham
Chief Architect, SWG FS
Santhosh Kumaran
IBM
Industry Technology
Strategist - Banking
Victor Dossey
Microsoft
Status
Status
Date
Actor
Comment / Reference
DRAFT
Approved
Version
No
Comment / Reference
Date
0.8
Updated diagrams and first comments
05-06-2014
0.96
Updated text with comments and reorganising it
17-06-2014
0.97
Updated text after input
07-08-2014
0.98
Updated the diagrams and small changes in text
11-08-2014
1.0
Added last comments
04-09-2014
Page 2 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
Copyright
© Copyright 2014 by BIAN Association. All rights reserved.
THIS DOCUMENT IS PROVIDED "AS IS," AND THE ASSOCIATION AND ITS
MEMBERS, MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT, OR TITLE; THAT THE CONTENTS OF THIS DOCUMENT
ARE SUITABLE FOR ANY PURPOSE; OR THAT THE IMPLEMENTATION OF
SUCH CONTENTS WILL NOT INFRINGE ANY PATENTS, COPYRIGHTS,
TRADEMARKS OR OTHER RIGHTS.
NEITHER THE ASSOCIATION NOR ITS MEMBERS WILL BE LIABLE FOR ANY
DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR RELATING TO ANY USE OR DISTRIBUTION OF THIS
DOCUMENT UNLESS SUCH DAMAGES ARE CAUSED BY WILFUL
MISCONDUCT OR GROSS NEGLIGENCE.
THE FOREGOING DISCLAIMER AND LIMITATION ON LIABILITY DO NOT APPLY
TO, INVALIDATE, OR LIMIT REPRESENTATIONS AND WARRANTIES MADE BY
THE MEMBERS TO THE ASSOCIATION AND OTHER MEMBERS IN CERTAIN
WRITTEN POLICIES OF THE ASSOCIATION.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 3 of 26
Cloud enabling the Banking Industry
Table of Contents
1
2
3
Background .................................................................................................................. 6
1.1
The Opportunity – Cloud Enabling the Banking Industry ........................................... 6
1.2
Defining the ‘Cloud’ .................................................................................................. 7
1.3
Layered Access to the ‘Cloud’ – the context for using BIAN ..................................... 8
1.4
Business Model Transformation using the Cloud ...................................................... 9
Cloud enablement using BIAN ...................................................................................10
2.1
A new conceptual model to define the Cloud configuration ......................................10
2.2
Using Service Domains to Organize Cloud Services ...............................................13
An Example using BIAN to Specify Cloud SaaS .......................................................19
3.1
Example - account opening .....................................................................................19
3.2
Solution Design – a simplified example ...................................................................20
3.3
Future Development Needs & Opportunities............................................................24
4
Summary ......................................................................................................................25
5
Conclusion...................................................................................................................26
Page 4 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
Table of Figures
Diagram 1: Simple Cloud central utility service, brokered to multiple bank subscribers ........12
Diagram 2: BIAN service domains & service operations as an enterprise service bus
directory ...............................................................................................................................14
Diagram 3: BIAN servics Mapped to host data structures .....................................................15
Diagram 4: BIAN serviecs constrain access, creating an application container ....................17
Diagram 5: Service Domains involved in the offer process ...................................................21
Diagram 6: Offer Management Component Structure ...........................................................22
Diagram 7: Behavior Model of the Offer Management Component .......................................23
Diagram 8: IBM blueprint ......................................................................................................23
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 5 of 26
Cloud enabling the Banking Industry
1
Background
1.1 The Opportunity – Cloud Enabling the Banking Industry
The Cloud is changing the way the World interacts at work and at play. The
enthusiastic adoption of mobile devices and the Internet in advanced economies has
spawned a frenzy of Cloud based application innovation and service developments.
This coupled with demand from emerging markets and even some third world
activities will combine to drive a huge global growth in computing and data needs
which are/will be serviced in many cases by Cloud. The promise of widely accessible,
low-entry-cost, scalable solutions with improved operational efficiency and flexibility
has attracted big and small business interests alike. Furthermore rapid development
approaches are enabling the assembly of far more agile and adaptive business
solutions. In some cases the development cycle is fast enough for developers to
adopt an iterative ‘trial and error’ approach.
Application stores and their associated Cloud services are rapidly changing social
behaviour. According to Gartner, the public Cloud services market was estimated to
have grown by 18.5% in 2013 to a total $131 billion worldwide, up from $111 billion in
2012. Meanwhile, IDC estimates that by 2020, nearly 40% of the information in the
digital universe will be in the Cloud in some capacity. So far much of the growth in
the Cloud has been driven by the take-up in social, consumer-centric applications. In
business perhaps the biggest driver has been cost savings with the consumption
based pricing model offered by the Cloud allowing businesses to avoid large capital
expenditures for technology infrastructure. Despite the obvious potential the impact
on mainstream commercial applications is modest in comparison and particularly so
in the Banking Industry.
There are many reasons commercial enterprises struggle to fully leverage the Cloud.
Perhaps the most obvious is their scale and complexity. It is one thing to provide a
stand-alone mobile phone-based application to help an individual find a place to eat,
manage their personal finances or exchange messages with their friends. But when
the application has to connect multiple users performing specific business roles that
are involved in a complex transaction that might be influenced by events in many
different locations, it becomes a far bigger technical challenge.
In order to support commercial applications in the Cloud additional design insights
are needed. One described in this paper provides a standard definition of the
functional ‘building blocks’ that everyone can use to assemble their commercial
applications. For some of the more commodity type of business activities such as
payments or financial accounting standard approaches are already emerging. But a
comprehensive definition of the full range of suitable building blocks covering all
commercial activity is not yet available. This paper explores how the BIAN Service
Landscape may be used to define just such a comprehensive commercial blueprint
for banking, a blueprint that could be used to ‘Cloud-enable’ the banking industry.
Page 6 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
1.2 Defining the ‘Cloud’
The term ‘Cloud’ has become ubiquitous referring to many different types of
computer based service. The overarching concept is of virtualization’ - providing
remote access to technology based capabilities over a network, typically but not
limited to the Internet. The range of virtualised capabilities bundled under the ‘Cloud’
banner covers most types of computer service including scalable IT infrastructure,
application development environments and integratable software applications.
This complex array of capabilities can be grouped under three broad categories:
IaaS – Infrastructure as a Service – addresses virtual access to processing
power, storage and other hardware. Examples of IaaS Cloud services include
Amazon Web Services (AWS), Rackspace, IBM’s SoftLayer and SAP HANA.
Though there can be latency in Cloud based access to IaaS, the key benefits
include easy access to low-cost-entry and ‘opex’ priced capabilities with
scalable and resilient technical infrastructures
PaaS – Platform as a Service – addresses virtual support for application
development and deployment. This can include different levels of application
development support but at a minimum provides application hosting and
deployment capabilities. Examples include AWS, Microsoft Azure, SAP HANA
and IBM BlueMix. As with IaaS the key benefits include low entry costs and
scalability plus access to leading practice application management capabilities
SaaS – Software as a Service – is the most conceptually complex and
perhaps least exploited aspect of the Cloud. It covers centrally delivered and
licensed software that can provide standalone or integrateable functionality.
This includes business productivity solutions such as Microsoft’s Office 365.
Business application examples include IBM’s Kenexa workforce and human
capital management solution, Salesforce’s CRM portfolio and Google Apps. Of
particular relevance for banks, BIAN member Temenos offers its end-to-end
banking application ‘T24’ in the Microsoft Cloud. SaaS is perhaps the aspect
of Cloud with the greatest potential for business model transformation, but it is
also the most challenging to integrate into a complex business enterprise.
In addition to the three broad categories of Cloud solutions, a distinction is often
made between the Public- and Private Cloud. This has many similarities with the
Internet/Intranet distinction in the past where a large enterprise might host its own
dedicated ‘Intranet’ typically for security reasons but also hoping to benefit from the
ease of access/flexibility of the Internet protocols. With the public Cloud the service is
publicly accessible and security is assured by various access controls. Enterprises
and indeed regulators have to concern themselves with the level of security and
assurance available with Public Cloud offerings, though the trend is towards evergreater acceptance as security improves. Where the security concerns justify, a
Private or Dedicated Cloud instance can be offered that limits participation to one or
a selection of enterprises. For simplicity the distinction between Public and Private
Cloud implementations (and the intermediate ‘Hybrid Cloud’) is not addressed further
in the remainder of this paper – the design approaches described can be used in
either configuration.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 7 of 26
Cloud enabling the Banking Industry
1.3 Layered Access to the ‘Cloud’ – the context for using BIAN
To explain the many considerations for adopting the Cloud but in particular to clarify
the possible role of the BIAN model it helps to build up the usage patterns in layers
corresponding to the three categories of Cloud solutions already described. Starting
at the base with infrastructure (IaaS). Software has long run in virtual machines (VM),
allowing applications to be moved between and share physical devices. VM
capabilities that were first developed to provide greater operational flexibility,
utilization and resilience can easily scale to exploit the virtualization opportunities
offered with the Cloud. The practice was established with Data Centers decades ago
and with the many technical and procedural advances since, IaaS now offers a
comprehensive array of capabilities that can transform the cost of technology use
and ownership. But IaaS only has a direct impact on the technical operations of a
business enabling it to be more efficient and flexible in the IT support it provides.
Building on virtual access to the technical infrastructure through IaaS, the next layer,
PaaS, provides a virtual application development and management environment.
With PaaS and its growing array of associated tools and techniques application
development can benefit from easier application utility re-use, rapid iterative
development approaches and streamlined application version management and
distribution. The impact as with IaaS and technology operations can be
transformational for the application development and administration functions. But
again any impact on the business itself is indirect, reducing application development
costs and improving application enhancement response times but not significantly
changing the nature of business execution itself.
Finally we come to SaaS – where the business applications are assembled from
Cloud enabled servicing capabilities. Some SaaS offerings are stand-alone in nature,
they provide virtual access to a service that provides a solution in its own right –
Office Software and consumer applications like Google, Twitter and Facebook are
good examples. Other SaaS offerings provide solutions that are intended to be
integrated into the overall business operations application portfolio – two notable
example already mentioned being Salesforce.com‘s CRM and the Temenos T24
Core Banking offering.
SaaS solutions, because they support business behaviors directly, promise
transformational changes to business practices. But to date the creation and
adoption of SaaS solutions has been limited to easily isolated business tasks or to
business activities where a common approach can be adopted with limited sitespecific configuration. How might a standard industry model that defines the full array
of generic business capabilities that could be delivered through Cloud based SaaS
help transform business behavior? That question is explored next.
Page 8 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
1.4 Business Model Transformation using the Cloud
With existing SaaS solutions a service subscriber typically integrates the ‘virtual’
service alongside their own in-house business applications. The relationship between
the SaaS service consumer and service provider in practice is little different from the
Cloud based delivery of infrastructure (IaaS) or platform capabilities (PaaS). In this
case, rather than accessing processing capabilities or a development environment
the requester is accessing some form of remotely packaged and executing
application logic. The business users within the calling enterprise may not even be
aware that some portion of their business applications are running remotely. As with
IaaS and PaaS the benefits relate to ease of set-up and access to leading practices,
there can also be operating efficiencies – but these may need to be partly offset by
unwanted marginal performance degradation from latency in the Cloud.
The BIAN model defines the complete array of all of the generic functional building
blocks that can be assembled to make any bank. These discrete business
capabilities could in theory each be offered using a Cloud based SaaS solution.
Using this construct as a common industry blueprint the possibilities open up
significantly. Instead of simply integrating selected virtual utilities within the internal
application portfolio, banks can now consider Cloud based outsourcing (and perhaps
in-sourcing) of whole aspects of their business operation to other banks, to nonbanks seeking integrated access to financial services and to specialised solution
providers.
There are already established examples of banks outsourcing operational elements
of their operation: it is common practice in high net-worth/private banking to
outsource much of the product execution and back office tasks to other banks; retail
banks outsource key elements of their consumer credit analysis to specialist third
party credit rating agencies. With a comprehensive banking model available in the
Cloud to structure the service exchanges for any aspect of banking what other
business arrangements are possible? When an industry model is used to package
Cloud based capabilities the role of the Cloud expands beyond virtualizing
operational capabilities to being a channel to form alliance partnerships where
potentially radical new collaborative business models can evolve.
In the next section the way the BIAN model provides an industry blueprint to support
this kind of in-source/out-source behavior is developed further. There is also a
discussion as to how the individual BIAN capability building blocks and the specific
and unique business role they each perform can be used to constrain access to the
services – this is an essential requirement to ensure operational security and integrity
is maintained as business activity is moved into the Cloud.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 9 of 26
Cloud enabling the Banking Industry
2 Cloud enablement using BIAN
This section provides a little more detail about how the BIAN standard is used to
define and organize Cloud-based services. A brief explanation of the BIAN approach
is provided here but it may help to reference the BIAN How-to Guide (available for
free download at BIAN.org) for a more complete description of the design concepts
underlying the BIAN standard
2.1 A new conceptual model to define the Cloud configuration
The primary use of the Cloud to date has been to provide virtual/remote access to
some hosted capability, technical or functional in nature. These hosted services often
exploit the scalability and flexibility of the distributed Cloud infrastructure to reduce
start-up costs, provide access to leading practice technologies and/or reduce
operational costs and complexity. In this conceptually centralised model each service
subscriber integrates their own dedicated instances of the Cloud hosted utility
services into their local business applications or working environment. The fact that
aspects of production are remotely supported may in cases be completely
transparent to their business users.
The approach described here that seeks to ‘Cloud-enable’ the Banking Industry
involves an extension to this centralised view of virtual service delivery. In an
extended model different banking industry participants and possibly non-bank
enterprises that need access to financial service capabilities offer and consume
business services from each other and specialist business service providers ‘through’
the Cloud. To represent this type of service exchange an additional higher level
‘conceptual model’ is needed to package and organize the Cloud services in a
standard form suitable for sharing between participants. This conceptual overlay is
defined using the BIAN Service Landscape and its constituent Service Domains. The
Service Domains define service enabled business capability partitions providing the
organizing structure for the SaaS solutions.
The BIAN Service Landscape and Service Domains are fully explained as noted
earlier in the BIAN How-to Guide. Some key properties are:



The BIAN model uses a very specific representation of business activity that
differs from most prevailing models: rather than modeling end to end business
processes that capture the linked sequence of actions needed to respond to a
business event, the BIAN model identifies the discrete business capabilities
that are involved in the event, without prescribing when or in what sequence
they may be engaged
Business applications developed from conventional process-based designs
tend to automate well-defined/repetitive activities, like a factory production
line. The BIAN designs can be used to architect applications that act as
loosely coupled, asynchronous service centers that interact through queue
based message exchanges, a design well suited to Cloud implementation
The BIAN Service Landscape contains the complete collection of business
capabilities that might make up any type of bank or banking enterprise – these
business capabilities are called BIAN Service Domains
Page 10 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry



The scope of a BIAN Service Domain is designed to represent a discrete and
elemental business capability – the business role of a Service Domain is
canonical, meaning it can be consistently interpreted in any deployment
The business capabilities defined by BIAN Service Domains can be
implemented with an ‘encapsulating’ service boundary that allows them to be
in or out-sourced through the Cloud as long as all of their service
dependencies can be supported
The BIAN Service Domain establishes the scope and external service
boundary for a business capability without defining how it may perform that
role internally. The business purpose or role of a Service Domain – ‘what it
does’ - is highly stable over time even though its internal mechanisms – ‘how it
does it’ - will inevitably evolve as new techniques and practices are developed.
Because the BIAN Service Landscape and its constituent Service Domains have the
above properties, a banking business blueprint defined using BIAN Service Domains
is canonical/common for all banking activity. Also, because the service boundaries of
Service Domains are highly enduring the model is highly stable over time. As the
Service Domains encapsulate their internal working behind their service boundary,
systems solutions that are aligned to this model can use highly distributed serviceenabled environments, such as the Cloud to support a fully componentised and
distributed business operating model.
The diagram below shows banks as an assembly of (#9) discrete Service Domains –
note that the views are greatly simplified, in practice a typical full-service bank will
contain well over 250 different Service Domains and depending on its organizational
structure some of these Service Domains will have many duplicated instances. On
the left the diagram shows a conventional centralised Cloud service implementation –
the Cloud based service offers a virtual utility where each dedicated instance
accessed by a bank is integrated with its locally operated systems. On the right the
standard industry Service Domain blueprint is now used to connect a service provider
with two banks as well as allowing those banks to source services with each other
and a third bank, showing how the Cloud now can act as an operational service
broker for in/outsourcing services between banks (and non-banks requiring financial
service capabilities – example not shown) and service providers.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 11 of 26
Cloud enabling the Banking Industry
Diagram 1: Simple Cloud central utility service, brokered to multiple bank subscribers
As noted the simplified diagram shows the conceptual design for a shared service
model where the Cloud plays the role of a channel connecting participants in the
marketplace. Two points of clarification:
1. The BIAN Service Landscape currently contains some 280+ Service Domains
covering a broad array of business activities – the range of operational models
covering in/out sourcing combinations between banks, non-bank enterprises
and specialist service providers that could be supported is extensive. As the
approach is embryonic we do not attempt to explore or anticipate what these
many business model options may be in this paper
2. The model shows high-level conceptual roles, the Cloud is shown hosting the
utility service in one configuration and simply acting as a channel in the other.
In implementation it is quite possible that the service provider in the second
‘brokered’ model may also choose to host their service delivery capability ‘in
the Cloud’ – the conceptual model on the right simply establishes the logical
configuration or execution responsibilities. In implementation the flexibility of
the Cloud to host services on behalf of parties can of course be used to
support any suitable physical combination of local and virtualized execution.
Page 12 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
2.2 Using Service Domains to Organize Cloud Services
In this section we discuss various considerations for using the BIAN Service
Domains’ semantic service operations to define SaaS specifications suited to Cloud
based implementation. The first point cautions that the exchanges described in the
BIAN model may include aspects that can’t always be readily supported in the Cloud
BIAN Service Operations can include exchanges not suited to Cloud Services
The semantic service operations that BIAN defines for its Service Domains describe
the service dependencies and interactions between Service Domains in high-level
semantic/conceptual terms – it is this collection of services offered and consumed by
a Service Domain that can be used to specify the SaaS solution elements. The
semantic service operations defined by BIAN typically involve the exchange of
business information that is clearly well suited to the Cloud.
Some service operations may include the associated movement of physical goods
and/or assignment of resources. Furthermore a BIAN service exchange may be
sensibly implemented using a simple one-way message based delivery of structured
information/data or may require a far more complex iterative dialogue possibly
including highly unstructured information. A BIAN Service exchange may also
request the execution of some kind of activity on the part of the called Service
Domain for which there may be a result or response anticipated at some point in the
future.
These different service exchange properties need to be accommodated in any SaaS
Cloud based solution. In practice there may be some BIAN service operation
dependencies defined in the BIAN standard that are not suited to a Cloud SaaS
implementation because there are aspects of the service exchange that cannot be
easily supported – if there is a physical exchange of cash for example. There may
also be performance and security limitations that constrain the use of Cloud based
solutions in situations. These issues need to be considered on a case-by-case basis
but it is assumed that the significant majority of BIAN service interactions are suited
to a Cloud implementation.
BIAN Service Operations as a Canonical Service Directory
In theory the core systems for a bank could be architected as a collection of
networked standalone service centers each aligned to the specific business role
corresponding to a BIAN Service Domain. In practice however, most banks operate
monolithic transaction processing systems that combine the roles of multiple Service
Domains on larger integrated systems. In order to present the more flexible service
center structure for business application assembly, banks are increasingly using
technology such as an enterprise service bus (ESB) to structure and package access
to these monolithic host systems.
BIAN Service Domains each define a discrete, non-overlapping business capability
and the service operations they offer similarly define unique non-overlapping
business services. As a result the complete collection of Service Domains and their
service operations can be used to define a comprehensive, canonical business
service directory with discrete/non-overlapping services for the ESB.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 13 of 26
Cloud enabling the Banking Industry
These services can then be mapped to the monolithic hosts systems ‘behind the
scenes’ using various technical approaches to optimise legacy host access.
The canonical ESB service model defines a stable target state that legacy
rationalization can work towards incrementally by mapping the legacy host systems
to selected sub-sets of the BIAN defined business services. The ESB then offers
access to well-structured business services for application assembly, masking the
complexity of the underlying host systems. The ESB based host wrapping approach
is shown schematically in the diagram:
Diagram 2: BIAN service domains & service operations as an enterprise service bus
directory
More details about using the BIAN standard to configure ESB based host service
access can be found in the BIAN How-to Guide. It is a rapidly evolving use of the
BIAN model that shows significant potential, in particular much is being learned about
the benefits and practicalities of wrapping overlapping legacy host systems behind
the ESB. These host access approaches include host session sharing, data caching,
master/slave data custody role resolution. This host access layer can be very
complex, particularly when the host environment includes overlapping legacy
applications.
Page 14 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
The mapping of the host-based information to the BIAN semantic services is shown
in the following diagram:
Diagram 3: BIAN servics Mapped to host data structures
For the purposes of this discussion on Cloud it is only necessary to consider the
application assembly side of the ESB equation, where business applications are
assembled using the ESB Service Domain aligned service operations as shown in
the earlier Diagram 2.
Constrained Access to Service Operations – Service Domains Provide Context
The business services that may be enabled using a mechanism such as an ESB are
suited for the controlled access between applications developed within the confines
of an enterprise. When the services offered by one Service Domain are consumed by
another Service Domain within the same enterprise arrangements can be put in
place in advance to ensure that the service call is legitimate and the requested action
is appropriate for both the requester and the called Service Domains. When services
are made available through the Cloud these intrinsic controls can no longer be
guaranteed. Additional constraints are needed for the ESB offered service to ensure
its external use is appropriate.
When considering these necessary constraints it is important to remember that a
property of good service design is that the same offered service may be used by
many different callers in different but valid business situations transparently to the
service provider.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 15 of 26
Cloud enabling the Banking Industry
A simple summary of the obligations on the provider and consumer of a service is as
follows:
For the Service Provider – it must specify the service in sufficient detail for the
requester to determine whether the service is appropriate for their specific use
and then undertake to provide the service to that specification
For the Service Consumer (requester) – it must access the provided service in
a manner that is consistent with its intended use.
For example the Service Domain that provides customer reference details may offer
a ‘customer ID query’ service that is intended to help the caller narrow in on a
particular customer’s identity using available details of a subject perhaps to check
whether they are already known to the bank. The offered service will define different
properties that it can use to isolate a customer and the requester will provide values
to those properties to drive the query. Depending on the specificity of the values
provided the service might match many candidate customers. The obligation on the
service provider is to provide sufficient properties to the query for a close match to be
likely. The obligation on the requester is that they provide sufficient properties values
for the query to be targeted, hopefully eventually matching the single subject.
An example of unintended use or abuse of the service would be a call with very few
parameters defined so that the service is forced to return in the whole customer
directory as a result. This is an extreme example, but it shows that in addition to the
offered service specification there needs to be some contextual constraint that limits
the situations within which the requester employs the service.
One way to do this is to use the business role of a Service Domain as the
constraining mechanism for limiting access to offered services (and potentially for
filtering responses). In the example of the customer ID query the calling party would
need to initiate the request from some valid source, such as the Service Domain
handling Customer Relationship Management. This role would then be used to
constrain the scope of the query, perhaps to include only customers already
assigned to the relationship manager and then only providing access to customer
details that are relevant to relationship management.
All services offered through the Cloud would only be available to requesters that
manifest themselves as valid Service Domains. In order to provide this constrained
access the service provider would either need to certify that the calling party is acting
as a Service Domain or more likely the service provider will publish Service Domain
software ‘containers’ to the Cloud that act as ‘proxy’ Service Domains. Requesters
would then build their applications within these containers in order to have structured
access to the services that they are enabled to call and the input that they may offer
back.
The published proxy version of a Service Domain may of course impose further
constraints to the internal equivalent Service Domain to provide additional controls
needed for external access. For example the external proxy for Relationship
Management may not have access to the full range of customer reference
information that the internal Relationship Management function has.
Page 16 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
This ‘proxy’ Service Domain Cloud access approach is shown the diagram
Diagram 4: BIAN serviecs constrain access, creating an application container
Finally to complete this section there are a couple of points of clarification with
respect to the design and specification of Cloud services:
Notable Design Properties for Cloud Services – defensive service calls
Due to the loose coupled and distributed nature of Cloud based service exchanges
all service access needs to be ‘defensive’. For the service provider this means that
they need to constrain service access and filter requests to ensure that the calls are
legitimate and appropriate – the use of Service Domain ‘proxies’ just described is one
way to do this. There are many other practical/technical considerations, such as the
use of access authorization ‘tokens’, managing service volumes and performance
that are not addressed in this paper.
For the service subscriber the access also needs to be defensive, meaning that the
requester needs to deal with delayed, missing and erroneous responses.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 17 of 26
Cloud enabling the Banking Industry
Notable Design Properties for Cloud Services – required information precision
The requester/consumer also needs to ensure that the meaning of the information
exchanged is agreed to the required level of detail with the provider. For some
service exchanges the terms may only need to be agreed at a fairly vague semantic
level. For a marketing service to return a list of prospects to a sales function both
parties can loosely agree the term ‘prospect’ quite safely. How both involved parties
may choose to define and fully represent the concept of a prospect internally can
differ significantly without compromising the effectiveness of the service exchange.
Conversely when a credit assessment function requests the details of account
activity and balances, the agreement as to the required data content and its meaning
clearly needs to be defined with far greater precision for the many financial
transaction details and derived values contained in any statement that is returned.
The correct semantic definition of the information exchanged using Cloud services
needs to be appropriate for the intended use and as the above examples show, this
will vary for different services. Meta-data definitions of the semantic service content
can be defined and used to ensure the consistent interpretation of the service
contract where higher levels of data precision are needed. The fairly technical topic
of traceability between the semantic BIAN designs and the underlying
implementation messages is the topic of a separate paper that can be referenced on
BIAN.org.
Page 18 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
3 An Example using BIAN to Specify Cloud SaaS
In this section we describe how the BIAN Service Domains and their semantic
services are interpreted for implementation in the Cloud using the example of
account opening. We start by pointing out that in addition to the obvious technical
differences, the business context for providing service-based access is fundamentally
different in the Cloud to the more traditional ‘dedicated’ customer channels.
In the past a customer would head to the local bank branch to apply for a mortgage,
something they can now do easily from their mobile phone. But they can use that
same mobile phone to arrange their gym membership or order dinner - the bank must
establish its own differentiated virtual presence in the new environment in the same
way that having high street bank branches established a local presence for banks in
the past. The need to differentiate in the new mobile channel space is made more
pressing as the Cloud is an open environment where other non-bank enterprises may
now offer many competing services for which Banks have been the only source in the
past.
The new customer access environments provide both an opportunity and a
significant threat for Banks. They can now support far better product matching and
ease of access to a wider range of bank products and services that can be woven
more tightly into customer behaviors, but they also introduce greater competition as
other banks and non-banks enjoy similarly open access to the customer. Agility and
innovation will be key to success.
The BIAN model, by breaking activity into discrete generic elements, can provide key
insights into this aspect of the customer interaction. An example of the customer
account opening activity shows how past practices where the process is closely tied
to the specific product or service on offer can now be opened up to allow the process
to be driven by greater customer insights and to include different product
combinations.
3.1 Example - account opening
As noted, the account opening process has traditionally been used by a bank to
establish a relationship with a customer in the context of the customer buying specific
products and services. In the conventional product-centric approach, account
opening has been a function supported by the core banking application with each
account opening procedure supporting its own specific product type. But as banks
move to being a customer-centric enterprise, account opening becomes a key
customer-facing business process that enables banks to establish a relationship with
the customer spanning the product silos.
A bank may even “open an account” for a customer where some of the products
involved may actually be managed by business partners. Thus the need to decouple
the account opening function from the “product processors” (the essence of core
banking applications) becomes evident. Universal account opening becomes a
collaboration among a set of business capabilities with the goal of establishing and
enhancing a relationship with the customer as well as setting up the product delivery.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 19 of 26
Cloud enabling the Banking Industry
Not surprisingly, this is a manifestation of business activity particularly well suited to
the BIAN representation and a Cloud based implementation.
Below is a list key requirement of universal account opening:








Flexibility: The activities involved and their sequencing could vary between
instances of account opening process as this depends on the products
involved, the customer profile, and the specific terms & conditions
negotiated.
Multi-product support: One or more products could be involved and any of
the products the bank sell could be included.
Dynamic bundling support: The bank should be able to dynamically
assemble a bundle of products and services and negotiate the terms &
conditions at the bundle level based on customer insight and product
profitability data.
Relationship pricing: The bank should be able to dynamically price the
offerings based on the customer relationship with the bank and other
factors.
Next best action: The bank should be able to use the account opening
process to cross-sell/up-sell as it provides a great opportunity to engage
the customers on their financial needs.
Integration with partner applications: as mentioned earlier, its partners may
service some of the products a bank sells, so account opening should
facilitate integration with partner systems through APIs. Another example is
to kick off the account opening process from third party applications such
as an e-commerce app on a mobile device.
Integration with enterprise applications, primarily applications that manage
systems of records.
Integration with external services: As Cloud-based business services
become available, banks are rethinking their IT strategy leading to
componentization of monolithic applications. This applies to account
opening as well as many of the participating services will be sources from
Cloud-based service providers.
These complex requirements can be effectively modelled using the array of BIAN
Service Domains that support the many aspects of the customer interaction. The
Service Domains define the different discrete elements involved in a way that covers
the range of customer related perspectives and activities while also ensuring that
they are decoupled from the products and services that may be ‘matched’.
3.2 Solution Design – a simplified example
The BIAN Service Domains used to model the account opening example above
define a business architecture that can be mapped to an underlying systems
architecture for implementation. In practice there are times when a BIAN Service
Domain can be supported by several finer grained IT components and a larger IT
system may support several Service Domains. These specific Systems Architecture
mapping variations are discussed in the BIAN How-to Guide. For the purposes of this
paper it is easiest to consider the most common situation where a BIAN Service
Domain maps directly to a single IT Service Component.
Page 20 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
In this case there is a simple correspondence between the scope of the Service
Domain and its semantic service operations and the IT Service Component and its
service/message boundary. Each IT Service Component provides a set of APIs that
enable clients to invoke the services provided by the corresponding service domain.
The implementation level detail of the API’s will typically be far more detailed than the
high level semantic service descriptions, but their collective scope/purpose will be the
same.
In more technical detail – an implementation approach (using IBM’s BlueMix)
In order to explain implementation in slightly more detail by means of a worked
example, here we briefly describe how the BIAN Service Domain designs could be
implemented in IBM’s BlueMix Cloud development environment. The IT service
components store the ‘state’ of the control object instances associated with the
corresponding service domain. Behavior of these components – that is, their
response to a service request – is determined by a set of configurable business
rules. These rules take into account the state of the control object, the service being
invoked, and the parameters being passed.
The first step in the solution design is to identify the Service Domains that participate
in the collaboration. These domains are partitioned into two groups:
Service domains that are external to the enterprise and provided as shared services
on a public Cloud
Service domains that are internal to the enterprise and provided as shared services
on a Private Cloud.
Below we show the main BIAN Service Domains that support for account:
Diagram 5: Service Domains involved in the offer process
For this discussion, it is assumed that the components Customer Credit Rating,
Correspondence, & Sales Product are in group 1 (external/out-sourced) while Cross
Channel, Offer Management, Customer Relationship Management, Party Data
Management, Position Keeping, Product Matching, & Current Account are in group 2
(internal).
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 21 of 26
Cloud enabling the Banking Industry
Next, detailed designs for each component are developed. This includes API
definitions, design of the local storage, and the business logic that drives the
component behaviour. As an example, below we give the design of the Offer
Management component.
Offer Management Component Design
The granularity of a BIAN component is defined around the life cycle of the control
record it is associated with. For the Offer Management component, the control record
is the ‘offer’ that the bank is making to a customer to sell one or more of its products.
The design of the component should address (1) how interfaces are defined to
expose services offered by the component (2) how component behavior is defined
that leads to the implementation of these services, and (3) how data associated with
the component is managed. For the Offer Management component, interfaces are
defined using REST APIs, behavior is defined using a Finite State Machine, and the
data is managed using a relational database. Figure below shows the component
structure.
Diagram 6: Offer Management Component Structure
REST APIs and the corresponding BIAN service operations are shown in the table
below:
REST API
BIAN
Service
Operation
Description
HTTP POST /offerdatamanagement/offer/{offer-data}
Create Offer
HTTP GET /offerdatamanagement/offer/{customeridentifier}
N/A
HTTP GET /offerdatamanagement/offer/{offeridentifier}
N/A
HTTP POST
/offerdatamanagement/offer/update/{offeridentifier}{updatedata}
N/A
Creates a new
offer
Retrieves offers
for a given
customer
Retrieves a
specific offer
Update an
existing offer
Page 22 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
The behavior of the Offer Management component is captured in a finite state
machine, as shown below.
Diagram 7: Behavior Model of the Offer Management Component
The data owned by the control object, in this case the offer, is managed by the
component using a relational database. The data elements for offer management
include: {Offer Identifier, Offer Start Date, Offer End Date, Product Identifier(s) - one or more
products, Customer Identifier(s) - one or more customers , Offer Description, Offer Name, Offer
Approval Date, Offer Lifecycle Status, Offer Purpose, Offer Term Type, Offer Channel(s), Offer
Documentation (agreement terms and conditions), Offer Conditions, Offer Source of Income, Offer
Collaterals The collaterals against which the offer if provided , Offer Currency Type,..}
This specification could then be implemented using an IBM blueprint as shown
schematically below.
Diagram 8: IBM blueprint
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 23 of 26
Cloud enabling the Banking Industry
3.3 Future Development Needs & Opportunities
The rapid changes in the customer access channels brought about by the Cloud and
other technological advances are driving changes in regulatory perceptions and
requirements and fuelling competitive activities that promise to reshape the banking
landscape. Some highlights underscore the pressing need for banks to prepare for
and align to these changes:





Regulatory changes – in addition to the obvious move to increase the range
and complexity of regulatory controls, regulatory changes are also influencing
the nature of the services that can be offered. For example a recent European
directive requires that banks be able to support a customer’s request to
execute payments through any payment service
API based bank access – many banks are exploring different ways to
support application based access to their host systems, activities that may
benefit from the approaches outlined in this paper
App stores developed by 3rd parties – an extension to banks providing API’s
for their customers to access their systems is providing APIs for third parties to
develop new applications and services that integrate the banks capabilities as
some element of their service offering
Different paths to capital – in addition to financial service innovations,
community based funding models are constantly evolving that may offer
alternative cash flow, investment and risk management options for businesses
Service specialists – Credit Agencies are a good example of a specialist
service that has been outsourced by many banks, with the scope and flexibility
of the new Cloud technologies, what other specialist services may appear?
Page 24 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Cloud enabling the Banking Industry
4 Summary
The BIAN model is unique in that it defines discrete elemental and canonical service
centres that collectively cover all banking activity. Packaging Cloud based SaaS
offerings to align to the logical partitions of the BIAN standard provides a common
industry blueprint for shareable business services. Banks, their alliance partners and
customers can collaborate by building integrated applications in the Cloud that span
their different operations. Furthermore the Service Domain role definitions can be
used to define and implement service access constraints needed to ensure legitimate
and appropriate use of Cloud based services.
This is a more advanced use of the Cloud than existing stand-alone services and
application ‘service utilities’’ that developers can integrate within their local
application portfolios. It is a business capability driven model that supports alliance
based partnerships and business application integration that exploits the open,
connective nature of the Cloud to bring in new players, support new collaborative
business models and expand the markets for the banks.
Financial services firms arguably have been more cautious than other industries
about adopting Cloud services, with well-placed fears about data security and
regulatory concerns top of mind. But as well as being a source of competitive threat it
is becoming increasingly clear that the Cloud offers many potential advantages for
banks.
Future patterns can be seen in one area where the Cloud is already playing a
significant role – Payments. Banks may not be fully aware that they may today be
indirectly involved in aspects of payments and card fulfilment that are already Cloud
resident. The proliferation of new and innovative payment mechanisms using the
Cloud demonstrates how traditional approaches can be transformed and established
banking relationships threatened.
Though the role for banks as the final account holder is probably not under
immediate threat from changes in payments, banks must be careful to ensure that
their customer relationships and the associated insights they can gain are not
undermined as more flexible payment options are presented to their customers by
competitors. More importantly these Cloud related changes are likely to apply
increasingly across many other banking activities not just to payments.
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany
Page 25 of 26
Cloud enabling the Banking Industry
5 Conclusion
It is early days in the development and adoption of the BIAN banking standard. But
the BIAN model appears to enable unique insights into Cloud related business
behaviors by providing an industry blueprint matching the business operations to the
underlying systems. The Cloud based solutions can operate as a loose-coupled
network, allowing banks to form alliances with other banks, specialist service
partners and even to integrate their services within their customer’s operations.
The conventional product and service boundary that banks have with their customer
blurs as banks can offer more flexible operational access to their core capabilities
such as: cash flow management, currency exchange and cash management,
financial risk management, financing and access to primary and secondary
investment exchanges. Banks need to master the different model views such as that
of BIAN to be able to position themselves for the fundamental changes already
underway in the banking industry that are fuelled by the Cloud and other related
technology advances.
Page 26 of 26
© 2014 BIAN e.V. | P.O. Box 16 02 55 | 60065 Frankfurt am Main | Germany