FLEXTERA Financial Architecture helps banks to efficiently develop their business, Alexander Glazkov

Friday, August 26, 2011

What IT systems are able to ensure rapid and efficient business development? Let us single out five most important characteristics of such system: component architecture with a capability of layering, focus on business processes, high performance and focus on rendering services to customers using multiple communication channels. All these capabilities have been implemented in FLEXTERA system, a suite of new-generation software products which supports all the tasks banks are facing today.   

Five, maximum ten years ago, banks used to construct their IT landscapes mainly with the help of monolithic IT systems, as at that period of time they most efficiently satisfied all demands of the banking business. Numerous applications, sometimes called a ‘patchwork blanket’, and tools of their integration within common information space were a far cry from  being perfect. Similar systems are still used today, however, the world has already changed: technologies have significantly progressed, banks’ vision on the ways  to solve their business challenges and what IT infrastructures they need have also changed. Monolithic systems are being replaced by component ones. 

Advantages of new systems are obvious today. When previously banks had to put up with an existing imperfect product and tried either to improve it, or decided to throw it out, replacing it by a new one - which was an expensive, long and risky process, now they have a new convenient alternative.  Having component architecture available and with no need to replace the entire system, it is possible to replace an outdated module by a new one, required for bringing the financial product to market or rendering new services to the bank clients. Such an alternative is FLEXTERA Financial Architecture.

Another vital point is that products being used today are targeted at automation of a big number of functions. Such functionality systems are catalogues of functions and applications. But each bank has a set of specific business processes and this implies choosing a different approach.  An big advantage of  FLEXTERA software products is a focus on the bank business processes automation, not just individual functions. You  can understand difference between these two approaches with the help of an analogy: study by books or study in the University. A library is a concentration of useful information in various fields of knowledge.  However, it is too long, difficult and inefficient way to study using a collection of books, looking through tons of catalogues,  books and periodicals. That is why we are sending our children to study in the universities – to the best faculties and to the most experienced teachers. This approach allows mastering all necessary skills and expertise in the most efficient way.  For banks such ‘universities’ are business processes, not just sets of functions.

This way, the goal of a state-of-the-art IT system is construction and optimization of business processes. Unfortunately, building-up in the functional system of specialized applications which define business processes cannot solve this problem, as functions are created in such a way that it is impossible to ‘remove’ them painlessly in order to support  the bank operational model. The Core of the FLEXTERA-class system is a set of business processes targeted at optimization of the bank operations and successful business development.

Another very important characteristic of a state-of-the-art IT system is its distinct layering to the front-office, back-office and middle-office. It is essential  as the tasks of accounting, control, product sales and rendering customer services, data generation and analysis and regulators reporting generation in a bank are absolutely different.  The problem is that the majority of existing systems have been developed on the basis of back-office systems and they are not oriented on efficient solution of other tasks, such as control, reporting or work with customers. Besides, in many systems, not only Russian, but from global providers,

there is no distinction between product accounting and statutory accounting. This is the reason for failure to account banking products and to reflect this accounting in banking operations for regulators or business management purposes. However, the system layering implemented in the FLEXTERA Financial Architecture renders considerable support in terms of improvement the work quality and accelerating business development pace in general.

One more benefit of a state-of-the-art system for successful  banks operation is a capability to support multiple service distribution channels.  A number of remote services provision channels and services and products sale outlets are constantly growing.   It is also essential that banking products implementation should be uniform,  be performed from a single point, and the channels should be recognized as access points to the bank services, where the bank can sell products or render services related to them. This is the way the FLEXTERA Financial Architecture has been constructed and that means  we can help banks to improve their business efficiency  – quickly and with minimal costs and risks.

Currently the IT system centralization is in the focus of development effort, that is why the performance improvement tasks are being highlighted.  The systems distributed between the headquarters and branches are unacceptable today, as banking products issue and their scaling require very fast realization and in distributed systems this process may sometimes last for many months.   However, state-of-the-art technologies and innovative support tools allow achieving fantastic results.  The FLEXTERA product testing has demonstrated that the system can efficiently  work processing 100 million contracts and supporting 100 thousand workplaces.  We confirm that now there are no problems with performance of this state-of-the-art product and  FLEXTERA meets all most rigid requirements.  .

In conclusion I would like to emphasize the following: to make business really efficient, to enable banks accelerated business development with minimal costs and risks, you need to build the IT architecture on the basis of solutions which have all the above characteristics.  This system should have component architecture with distinct layering, and a focus on business processes automation, and be capable to work with multiple channels with unrestricted performance. FLEXTERA system, a suite of new-generation software products from Diasoft meets all these essential requirements. We have been working on development of this system  for the last five years and today we are proud to say that we have made a good job of it.

FLEXTERA front-office family became the first and so far the only solution for automation of banks and financial institutions in Russia and Eastern Europe which has been successfully validated for compliance under  the IBM Banking Industry Framework. IBM international experts are confident that Diasoft SOA solutions fully comply with state-of-the-art industry and technological standards and can provide active market players with new competitive advantages.