PNC First U.S. Bank to Join Integration Standards Group BIAN

PNC Thursday became the first U.S. bank to join the Bank Infrastructure Architecture Network, a standards group that promotes the use of services-oriented architecture in banks.

BIAN creates "landscapes" — blueprints of sorts for IT departments to guide them in their implementation of service-oriented software, and ideally enable varying legacy and new software components to work together easily.

That PNC is joining BIAN is not surprising, given that the Pittsburgh bank's new (as of November) executive vice president and Head of Operations and Technology, Steve Van Wyk, is BIAN's chairman. Previously, Van Wyk was CIO and CTO of Amsterdam-based ING, which is the driving force behind BIAN.

One of Germany's three largest banks, KfW Bankengruppe, also joined BIAN today, as well as Nucleus Software (which provides retail and corporate banking software products) and the Asseco Group (which offers IT solutions to several industries including banking).

This brings the total BIAN community to 38 members: 17 banks, 20 technology providers and service integrators, and one academic partner.

PNC is "number one of a long list," of U.S. bank members, says Hans Tesselaar, director sourcing, innovation and governance at ING and executive director of BIAN. To gather more U.S. bank members, the organization is approaching Tier 2 banks. "Tier 1 banks are too complicated at this time to take this on," Tesselaar says.

"At the largest banks, there are so many layers, so many decision points and decision makers involved that it's extremely difficult," he says. "PNC is a good entry point for us, and it will help bring other similar size banks into the community."

BIAN's pitch to banks is a mix of cost containment and IT efficiency. "As a bank, everybody has budget pressure on the IT budget, so you have to spend each dollar as wisely as you can," he says. "If you have to spend your very scarce dollars on integration instead of improved functionality, that's not a wise exercise. If you can diminish integration costs, you can improve the business."

Moving toward the standardized IT environment BIAN recommends helps banks get their legacy systems to work in close collaboration with newly purchased software, and helps banks leverage their existing assets, Tesselaar says. And when a bank has cleaned up its existing IT landscape, it's less vulnerable to errors, he says.

As for cost reduction, last year, BIAN surveyed banks and vendors about the potential cost cuts banks can achieve by moving to a services oriented architecture. The expectation from banks was the integration cost reduction would be 50% 60%. Vendors expected between 25% and 30%. "I think the real answer is somewhere in the middle," Tesselaar says.

He points out that companies can take on a services-oriented architecture slowly. "You don't have to do it in one giant leap," he says. "You can select some critical areas, start modeling one thing to the standard landscape, then move to another area."

BIAN is completing its services landscape, and plans to deliver in the first quarter of 2014 one that's specific to banks.

ING has already used the services landscape to conduct vendor selection for core banking replacement. The bank plans to migrate its logical application architecture to the BIAN model. "This helps with all the pre-work before you do big investments," Tesselaar says.