Software giants Microsoft and SAP have joined forces to establish an industry association to promote and support the implementation of service orientated architectures (SOA) by financial services firms.
SAP says the Banking Industry Architecture Network (BIAN) brings together banks, software vendors and service providers to help ease the transition to SOA for financial institutions through shared domain and technical expertise.
Founding bank members of BIAN are Deutsche Bank, Credit Suisse, ING, Deutsche Postbank, Standard Bank, Zürcher Kantonalbank.
Axon, Finanz IT, ifb group, Steria, and Syskoplan are the first service providers to join the association, while core banking system vendors SunGard, Temenos and Callataÿ & Wouters have also signed up as founding members.
The BIAN association is based on SAP's Industry Value Network (IVN) for Banks, which the German vendor formed in 2005 as it looked to develop bank-specific business processes for delivering an enterprise-wide SOA.
BIAN is now an association according to German law and has an open intellectual property policy, to ensure that the specifications that emerge can be implemented on various technology platforms. Koen Van den Brande, worldwide industry manager for core banking, Microsoft, says that this openness will be key to the success of the association.
But while it would be beneficial for the association and the industry to have IBM and Oracle - the other big players in banking software and SOA - involved, he believes this is unlikely as they tend to take a "more proprietary approach".
Misys is another notable omission from the list of founding members. It already has a partnership with SAP to deliver an integrated banking system based on its its BankFusion technology, which will run on the Sap NetWeaver platform.
Thomas Balgheim, senior vice president, global banking line of business, SAP, says: "Through the success of the IVN, its members and SAP have turned their goal of forming a new industry association into a reality. This will enable members to create a truly open community."
SAP says outdated and incompatible legacy systems are hindering banks in the tightly linked global financial markets. The association will work to create a blueprint to enable banks to more flexibly use software to run core banking processes and achieve better interoperability among IT systems, allowing them to reduce risk and costs while improving overall operations.
By collaborating on the development and implementation of standardised services SAP says banks will achieve operational efficiencies, enabling them to concentrate on growth, time-to-market and customer demands.
Van den Brande says that the core system vendors involved in the association stand to benefit as they tap into the growing requirement for core system upgrades at large tier-1 banks that have traditionally developed software in-house. By working with commonly agreed SOA specifications, they can help the banks take a "buy and build" approach with SOA components that ease the pain of core system replacement.
The most recent large banking group core system replacement deal to be announced is Commonwealth Bank of Australia's four-year A$580 million deal with SAP. Van den Brande says there has been interest in the BIAN from Asia Pacific banks, and while the BIAN is initially focused in Europe, where its founding members are based, it is planning to put together regional sub-groups to share and develop the association's work worldwide.