THE CHALLENGE: Legacy systems and inflexible architectures often prevent investment management firms from leveraging applications across the enterprise. To improve interoperability across the organization, many firms are turning to service-oriented architecture.
When the New York Board of Trade needed to replace its clearing and settlement system following the Sept. 11, 2001, attacks on the World Trade Center, the futures exchange took the opportunity to migrate off its mainframe clearing and settlement system, which had been in place since 1981. The proprietary environment was slow, cumbersome and difficult to change, according to David Sternberg, director of clearing technology at the NYBOT.
So the NYBOT rolled out the Extensible Clearing System (ECS) from onExchange, powered by a BEA WebLogic Server, which integrates MQ Series messaging to allow the NYBOT to send information to its trading partners faster than it could with its legacy system. The new platform formats trade data using the Java Message System, which allows data to be deciphered by trading partners more easily.
While moving off the mainframe system improved the clearing and settlement process, it also accomplished something equally important: It paved the way for Sternberg's firm to start adopting service-oriented architecture (SOA).
SOA is a framework for developing and delivering software and business services in a distributed computing environment. It's application-centric, allowing a firm to build stand-alone applications so they can be reused easily in different areas of an organization. That contrasts with a process-centric approach to building software, in which the service is bound to the function it is designed to address and is not portable. The idea behind SOA is to build technology solutions around business processes to create a service available on the network that can be accessed throughout the organization using Web services and standards such as XML, SOAP and WSDL.
SOA is all the rage in financial services these days, as technologists seek to avoid reinventing the wheel within their organizations and cut costs by supporting single business services across an enterprise rather than multiple services that do the same tasks. Bruce Graham, vice president of worldwide consulting at BEA Systems in San Jose, Calif., says SOA is growing in popularity. He cites a recent survey that shows that 27 percent of companies have an SOA engagement under way, and 51 percent indicate they are familiar with SOA and rank it as a top IT priority moving forward.
"Over the next six to eight years, SOA is going to be big. It's going to change the way you build applications," Graham says. "We're moving from mainframe to client service to Internet-based computing," he continues. "Trading floors are clearly well down this path."
Gailyn Johnson, EVP and managing director of Wells Fargo Private Client Services (PCS) in San Francisco, says that SOA is helping financial services firms improve customer service. Wells Fargo recently rolled out its PCS Portal - built using an SOA platform - as part of an online customer service initiative. PCS allows multiple specialists within the Wells Fargo organization to collaborate together and service high-net-worth clients who might have multiple accounts at the bank.
Before, each business line had its own access point to client information and the systems did not talk to each other, making it hard to get a holistic picture of clients and their holdings at the bank. If a client changed account information, such as an address, with one adviser, the change would have to be manually entered into other systems. SOA allows Wells Fargo to make the address change once across all the applications.
Johnson points out that some customers are self-service oriented or are content to be served by a call center agent, so it's especially important that the different touch points have access to the same information.