[Article] Essential 'Digital Finance' Strategy ..."After all, competitiveness of Core Banking is the key"

2017.05.23 15:02

bankwareglobal

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Essential ‘Digital Finance’ Strategy … “After all, competitiveness of Core Banking is the key”



[Special Article/Banking System 4.0 part 2]

Conditions required by ‘4th Generation Core Banking System’

2017.05.18 11:34:21 / 박기록 rock@ddaily.co.kr

To exaggerate a little, the next generation system project, where financial companies are spending huge amounts of money, is not a simple IT development task. It is a very elaborate sculpture that reflects the situation of the times or embodying the values of the times.

What should be included in the next generation system that should be running for the next 10 years? This is the main question that CEOs and CIOs from Financial companies should ponder about. Since it is not a vague discussion but directly connected to the survival of the company.

Perhaps the current value that financial industry faces is ‘the implementation of digital finance’. Not only hardware stability of IT infrastructure is required, but also software innovation that can respond to market situation. Are the current core banking systems of financial companies appropriate for the implementation of digital finance? After all, if one goes into it, it will face the problem of the core banking system.

 

What is ‘4th Generation Banking System’?

Mr. Lee KyungJo, CEO of Bankware Global, emphasizes “Today’s banking system should evolve into ‘4th generation’”. Mr. Lee suggested that the next generation system business ordered by the financial institution should use the term ‘4th generation Banking System (Banking System 4.0)’ instead of ‘Post-next-generation’.

Then, what should be defined as ‘Banking System 4.0’?

Indeed, the boundary between the existing next-generation system that has been in operation since the mid-2000s and the ‘post-next-generation’ system that has been in operation since 2012 is somewhat ambiguous. In order to distinguish the boundaries, ‘milestones’ are needed. But in terms of technology and business, the differentiation from the existing generation is not big.

Although some factors such as Java, mobile, channel, and expansion of information system were discussed as difference from the existing post generation system, they were not worth enough to invest billions of Won.

From this point of view, the concept of ‘Banking System 4.0’ defined by Bankware Global has become clearer than ever. It differs from existing ‘next generation’ and ‘post-next generation’. The concept presented in the ‘post-next generation’ is defined as ‘3.5 generation’, and Bankware Global’s core banking solution strategy is defined as ‘Banking System 4.0’.

Let’s talk about the market situation 45 years ago. In the ‘Banking System 1.0’ (first generation) of domestic banks started in 1972, and ‘online by subject’ was a main requirement. The second generation, which started in 1983 and lasted until 2000, evolved into ‘comprehensive online’.

The third generation, represented by the ‘next generation system’, began in the mid-2000s, when the mainframe transitioned to the Unix-based open environment and implemented system that operates 24/365. Technological innovations such as multi-channel architecture (MCA) and relational database have been made remarkable compared with existing ones.

The ‘post-next generation’ system, which is being implemented in banks since 2012, is defined as 3.5 generation. Java development and system management has been introduced. The introduction of a bizhub or marketing hub enhanced marketing capability through customer analysis, based on integrated customers and products.

Then what are the technical elements that implement the ‘Banking System 4.0’ strategy?

Bankware Global points out the key features of ‘Banking System 4.0’: ▲ cloud computing (x86 / OSS), ▲ Java, ▲ micro services architecture, ▲ open platform, ▲ big data analysis, ▲ artificial intelligence, ▲ support of global business, and ▲ object-oriented design structure. The main point out of all these features is the incorporation of ‘object-oriented design’ that has never integrated in the existing ‘next-generation system’ project.

Bankware Global highlights that the ‘Banking System 4.0’ strategy should satisfy the innovation that requires in three aspects: consumption, provision and type of financial services. This is directly related to the ability to enhance the ‘digital banking’ strategy that has been the biggest issue in the financial sector these days.

What is core banking system that meets ‘digital banking’ strategy?

Recently, financial services combines with mobile devices, AI, and Internet (IoT) have been introduced. They occur at the points where it was unimaginable years ago. But today, it is possible to pay something using voice while watching TV.

“Now, the core banking system strategy should be implemented considering this environment.” These services are called as ‘smart services’, which are the convergence of industrial value. Eventually, a core banking system that can implement this service is required in the ‘Banking System 4.0’.

In this regard, Bankware Global has more specific requirements about core banking solutions in the time of ‘Banking System 4.0’. ▲ Solution that based on generic business model ▲ Second core system ▲ Open API utilization ▲ Flexible response system (configurable & pluggable) ▲ Cloud computing environment ▲ ‘Micro-service architecture’ structure ▲ Implementation of big data analysis environment. In other words, they are the new requirements by the bank that is preparing the next generation of projects from now.

A solution that based on ‘generic’ business model means a solution that has features to expedite the convergence of products between different industries and facilitates the extension of service of other industries.

Furthermore, the ‘2nd core’ system does not replace the existing core system that has a huge cost, but opens up a way to acquire the ability of Banking System 4.0 rapidly and cost-effectively. On the other hand, ‘Open API’ means that solutions should aim for eco-system that can integrate products and services between different industries.

In addition, it should have a flexible response system that can quickly reflect the business rules that need to be handled differently depending on the type of service, and at the same time, be a solution based on a cloud computing environment that can rationalize on-demand cost structure.

‘Micro-service Architecture’ refers to core banking system strategy for various service responses. With current single service system, it is difficult to quickly respond to the new and unpredictable service requirement of customer. Micro-service architecture implements the system by dividing independent tasks into small units for handling. This concept enables a system that can quickly create other business services by combining small-sized services when necessary, and thereby enhancing service responsiveness.

Bankware Global introduces this ‘micro-service architecture’ strategy as a concept with the cloud environment. In order to ensure availability and scalability of core banking systems in a cloud environment, a distributed computing environment system is required. And the micro-service architecture makes it possible.

In order to globalize its core banking solutions, Bankware Global is pursuing global financial software market such as China, Japan, and Southeast Asia. In China, Bankware Global has successfully implementing MyBank’s cloud-based core banking system through Micro-service architecture. It also attracted huge investment from Alibaba Group which is the parent corporation of Internet bank.

President Lee KyungJo said, “We plan to bring the proportion of overseas sales to 70% in the future and 30% in Korea.” “Ultimately, we aim to become the top 5 financial software company in the global market.”

See more:

http://www.ddaily.co.kr/news/article.html?no=156031

 

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