Proposal to Reduce Exorbitant Expenses Associated with Banking Combination
Standardizing Banking Systems for Innovation: The BIAN Approach
The Banking Industry Architecture Network (BIAN) is a groundbreaking initiative aimed at reducing the cost of integrating banking systems by defining standard business services. This network, co-founded by Dutch banking giant ING in 2008, is a successor to an initiative started by SAP in 2005 to standardize banking processes and software.
The goal of BIAN is to define common systems and processes used by banks in a "business semantic" language, providing a common language for banking architecture. BIAN's approach centers around more than 320 Service Domains, which represent discrete functional building blocks that handle specific banking business data and processes. These Service Domains expose their functionalities through standardized services implemented as APIs, allowing banks to orchestrate any banking process by combining multiple domains.
By harmonizing the semantics of business data with its Business Object Model (BOM) and aligning with industry best practices, BIAN enables banks and fintechs to connect systems more efficiently, streamline mergers and acquisitions integration, and benchmark capabilities across institutions. The use of standards provided by BIAN also facilitates flexibility, making it easier for banks to recombine and adapt components in rapidly changing markets.
One of the key benefits of BIAN is its potential to unlock innovation in the banking sector. The cost of integrating a new application into legacy systems can be three to four times the cost of the application itself, stifling innovation. By providing a standardized framework, BIAN aims to reduce these integration costs, improve interoperability, and enable rapid innovation through reusable, loosely coupled, and transparent building blocks for banking software architectures.
The banking industry has a legacy IT problem, with complex architectures built over decades. Keeping legacy infrastructure running can be challenging, as demonstrated by RBS's 2012 IT outage. Persuading banks to adopt another set of standards and established providers to adopt an as-yet unproven service model will not be easy. However, the analogy used is that BIAN's work is like providing a city plan, with banks choosing their own routes through the city.
BIAN was started with the intention of including more suppliers to facilitate a more agile IT infrastructure, as suggested by the participating banks. SunGard has used BIAN as the basis for its Ambit core banking software platform. The goal for software companies is to "align the boundaries of their software with the BIAN landscape". BIAN includes supplier members such as SunGard, Microsoft, and IBM, and banking participants like ABN-AMRO, UBS, Deutsche Bank, and Credit Suisse.
ABN AMRO is working on defining service domains to make sure they don't overlap and to reduce the number of systems, using BIAN as a reference. Henk Houtzager, head of strategy, innovation, and architecture at ABN AMRO, supports BIAN to make it easier to buy off-the-shelf software and to refresh ABN AMRO's IT landscape.
BIAN has identified 260 'service domains', common functions that every bank performs, and has completed 63 of these definitions. The benefits of unlocking innovation in the banking sector are hoped to reach beyond the industry and into society as a whole.
In conclusion, BIAN's standardized model is a practical and evolving solution to the challenges of complex banking IT infrastructure. Its extensive and mature service landscape is widely recognized as a key reference architecture in the banking industry, facilitating agile, interoperable banking systems, especially for neobanks and digital transformation efforts. By reducing integration complexity, lowering costs, and fostering innovation, BIAN is poised to revolutionize the banking sector and beyond.
[1] Banking Industry Architecture Network. (n.d.). What is BIAN? Retrieved from https://www.bian.org/what-is-bian [2] Banking Industry Architecture Network. (n.d.). BIAN Service Landscape. Retrieved from https://www.bian.org/bian-service-landscape [5] Banking Technology. (2021, March 18). BIAN's standardised model for banking architecture. Retrieved from https://www.bankingtech.com/2021/03/bian-s-standardised-model-for-banking-architecture/
- The Banking Industry Architecture Network (BIAN) aims to foster innovation in the banking sector by reducing integration costs associated with new applications, as many of these costs can be three to four times the cost of the application itself.
- By using BIAN's standardized framework, banks can potentially streamline their business operations, as the practical and evolving solution provides a common language for banking architecture, enabling interoperability and fostering agility in the banking sector.
