Banking on Linux

If they're familiar with the history of computing, they might flash a nostalgic grin for the legacy operating system, which many recognized as technically superior, but was largely squashed by the emergence ofWindows* in the 1990s.

For many branches constituting the worldwide banking sector, OS/2 continues to enjoy popular use, both as the software engine that powers many of today's ATMs, and as an OS that could scale from desktops to servers and has a reputation for high up-time and stability.

Whatever the OS, financial institutions are re-evaluating their branch technology investments since many legacy OSs are reaching end-of-life, phasing out support and institutions are realizing the need for a more flexible IT infrastructure to support the transition to on demand business.

Stacked atop OS concerns is the reality that the financial industry worldwide is in a state of rapid evolution, due in large part to deregulation and consolidation, which- combined with leaps in technology-continually spurs competition between banks. This competition requires those institutions to balance the need to control costs while simultaneously pushing to provide higher levels of customer service and satisfaction.

Making Change

For Milan, Italy-based Banca Popolare di Milano, one of the largest banking organizations in the country, with 600 branches and 6,300 employees worldwide, the inevitability of migrating forward from OS/2, coupled with the need to remain technologically competitive, prompted them to initiate an entire IT upgrade starting in December of 2002.

BPM is no stranger to the realities of consolidation. As a group comprising such financial institutions as Meda SIM Bipemme, Ges.Fi.Mi, Bipiemme Gestioni SIM, BipiemmeVita, Banca 2000 S.p.A and First Skelling Inter Finance Co.Ltd., BPM needed to ensure continuity within these disparate entities while providing the flexibility for further acquisitions down the road.It was a two-year upgrade process that replaced OS/2 with a mixed environment that leverages z/VM* and Linux* and consolidated multiple distributed servers onto two new IBM* mainframes.

Linux continues to emerge as a viable alternative for institutions-both financial and otherwise-that are looking to upgrade their IT resources. Linux is well suited for organizations looking for a solid return on investment, overall leveragability of existing and new resources and the ability to support service-oriented architectures. Linux also delivers the same legendary reliability and security that banks have depended on with OS/2.

As with most banks, BPM is driven to provide its customers with the technological conveniences, such as Web-based and telephone banking, which helps ensure their continued loyalty. Although such delivery channels have become commonplace, updating the IT infrastructure to accommodate the technologies can be a daunting proposition, particularly-as was the case with BPM-when the delivery channels had been deployed, one on top of the other, haphazardly and with little or no integration with the bank's branch operations.

BPM created hassle-free banking

The end result for BPM, not surprisingly, was a tangled system of transaction-processing offerings, making it extremely difficult for the bank to provide its customers with a hassle-free and seamless banking experience across its many channels. Customers conducting Web based transactions would have to wait for their transactions to be reflected in the bank's branch and telephone channels, ultimately leading to frustration for the customer as well as requiring additional IT and personnel processes to sort out the confusion, driving up overall costs.

'Our main goal was to integrate all of our channels so we could have a single view of our customers,' says Clive Whincup, CIO of Banca Popolare di Milano. 'Channel integration could help give us a competitive advantage because we can be more reactive to business demands and cut the cost of implementing and maintaining the system.'

Thrown into the mix was an IT infrastructure largely dependent on distributed OS/2-based servers operating everything from credit evaluation to customer relationship management (CRM) applications. The entire system demanded a more streamlined IT environment to better serve the bank's customers as well as boost overall system security and availability. BPM coordinated with IBM Global Services-Business Consulting Services to achieve its goals for a new IT infrastructure to help improve the overall customer experience by implementing a consolidated, integrated and multi-channel banking solution that could accommodate Web-based, phone based and ATM-based transactions while also providing the potential for future growth and innovations.

'We saw IBM as the only global partner that had the depth of skills and expertise-in both processes and technologies-that we needed for such an intensive effort,' says Whincup. 'IBM's strong support for open technologies like Linux was also key.' They also recognized the need to streamline their system to ferret out the redundant processes that had emerged as a result of their distributed server environments and conflicting applications.

The infrastructure upgrade was no small feat, requiring the installation of two zSeries* 990 servers running z/VM as well as Novell SUSE LINUX v.8 partitions. Through z/VM, the bank is able to dynamically shift central processing units (CPUs) and memory to the necessary workloads as well as provide the capability to create virtual server partitions to accommodate new applications in the future. Via Linux, BPM can host a variety of other business-critical applications while realizing a reduced total cost of ownership through savings on software licensing and support.

Leveraging Linux

BPM was able to leverage Linux in a variety of ways. The bank was able to dispose of most of its previous client applications by hosting Lotus Notes and Domino 6.5.1 on Linux, where branch users can now access the company mail server through Lotus Domino Web Access 6.5 clients. Standardizing its branch clients on Linux this way allowed the company to end the need to distribute software and dispose of the costs associated with their previous client maintenance support.

Additionally, thanks to Linux, the bank was also able to reuse some of its existing hardware. With the savings realized on reduced software and licensing, BPM was also able to update its line of desktop systems within its branch offices.

Today the bank now enjoys a single, multi-channel, fully integrated banking solution that's unified on a system anchored by Linux, z/VM, Java 2 Platform, Enterprise Edition (J2EE) and WebSphere, on two zSeries 990 mainframes serving Linux-based clients across its entire 600- branch network. The system provides universal access across its branches and across its multiple transaction channels to the same singular view of the core customer data, all via a Web browser.

As a result of its standardization, integration and IT innovations, the bank is realizing an improvement in its crossselling and up-selling capabilities, which is helping to optimize
its revenue potential while improving its all-important customer loyalty. Additionally, BPM is experiencing a reduction is its TCO and, thanks to reusable hardware components,
it's able to quicken the deployment of new services and look ahead to adding more functionality.

'We look forward to building on our platform by adding Web Services, which will give us the means to expand our revenue opportunities through service partnerships-without
having to build them ourselves,' says Whincup. 'This is the essence of on demand business, and it wouldn't be possible for us without IBM's vision and guidance.'