During the late 1980’s, I was just starting my 25 year banking career and I remember receiving a tour through the mainframe computer farm in the basement of a major banking institution in New York City. The technology leader said, “these machines are like tanks, they are heavy, bullet proof and will run COBOL (common business-oriented language) forever.” During bank merger mania in the 90’s and early 2000’s, the consolidation play was to merge fast by keeping all technology from both entities, connect them to the network and worry about integration later. Well, that strategy caused a lot of legacy debt. And guess what, that technology leader was right. Fast forward to 2019, those tanks are still rollin’.
There is relief from the constraints of legacy mainframe computers without having to rip and replace. With hybrid cloud computing, banks can honor their legacy mainframe systems while adopting new cloud technologies. I know all about the complex process of untangling legacy systems to work with the new technology and the need for ingenious solutions to enable the financial industry to work with legacy systems while still engaging with the most modern technology.
Intelligent Banking with hybrid at hyperscale – Extend legacy systems using Azure Stack ￼
“Gartner predicts that by 2020, 90 percent of organizations will adopt hybrid infrastructure management capabilities.”—Predicts 2017: Infrastructure Services Become Hybrid Infrastructure Services.”, Gartner
Microsoft has a unique hybrid cloud computing solution that differentiates itself from some of the other big tech cloud providers and is distinctly suited for the financial services industry. Instead of having the banking industry upgrade to a brand new system, we leverage hybrid services so the banks can work with legacy systems and enable a layer of intelligent digital services on top. The Microsoft Azure cloud platform supports scalable hybrid environments for seamless shifting between on-premises and cloud computing. Financial institutions can take advantage of a hybrid scenario to help meet industry regulations in data security but still benefit from the elasticity of cloud computing. Azure has always been hybrid by design, based on our decades of enterprise experience. We stand alone in offering a hybrid cloud experience that is consistent across on-premises and the cloud. Even though the physical boxes are on-premise, the operating system and configurations are cloud native.
How does it work?
Let’s use a consumer banking example – confirming a bank balance. This everyday customer interaction lays the foundation for building next generation banking solutions. The scenario is to orchestrate the sending of a request from an on-premises demand deposit system and receive a response from virtual machines and databases in Azure cloud. For example, a branch banker wants to know how much money Howard Bush has in his bank account. The answer comes back stating $500. When banks try to extend legacy mainframe systems, the question is always how to expose the data to other systems and what can they attach to the platform to integrate the two. If you’re talking about just using the legacy COBOL system with modern up-to-date Linux or windows environment, the requirement for integration is simply: do I have network connectivity in between the things serving the API and requesting from the API? As long as the two can communicate over the same network, you’re good to go.
What are the speed bumps to be aware of?
A major sticking point for open banking projects tends to be with developing APIs (application programming interfaces). Even if it’s possible to extend legacy systems, the holdup may be the development team that is adding APIs. To build an API requires a learning curve where you’re spending quite a few cycles just understanding what you’re doing. My experience has been that for a newbie adding an API, the focus is an awful lot on designing with the API contract in mind and what it will look like between the receiver of the data and the consumer the data. You’ll find that it may take a day or 2 to get that all of that straightened out – which accurate coding depends on the framework chosen. Once established, this opens up the following benefits of Azure hybrid cloud.
What are the benefits of Azure hybrid cloud?
The benefits our hybrid cloud infrastructure fall into four broad camps
- Comprehensive security over data, applications, and identities with lower friction and faster pathways to regulatory compliance
- A dedicated and comprehensive FSI compliance program that streamlines compliance workflow with right to audit, automated audits, and self-reporting
- AI that monitors banking systems operations to gain insights and provide predictive analytics
- A hyperscale and hybrid build that supports maximum transparency and security while enabling seamless shifting between on-premises and cloud
What’s the bottom line?
Moving to the cloud leveraging Azure Stack helps to significantly reduces development time. It is constructed with pre-programmed and pre-built environments that can be deployed for any given user – allowing the use of modern cloud functionality for a hybrid environment integrating with your legacy system still on-prem.
Check out Azure for banking and capital markets to learn more about cloud solutions that address the biggest challenges in financial services. To stay on top of industry trends, follow this blog and me on Twitter and LinkedIn.