Hope is strong among bankers that deploying a modern IT architecture can provide them with major cost savings.

In a recent survey, 78% of bankers said they believe the adoption of a services-oriented architecture will result in a 25-50% reduction in banking IT costs. In a services-oriented architecture, software applications are written and deployed in reusable and interoperable chunks, like Lego blocks. Among vendors asked about the cost savings of such an architecture, a more modest 56% said they were confident that SOA standards would help banks see cost reductions on such a scale.

The vendors are more conservative "because they have to deliver as promised," says Hans Tesselaar, executive director of BIAN and director of sourcing, innovation and governance at ING, who spoke to BTN in a recent interview. "They would rather over-deliver and under-promise than the other way around."

All these numbers are a bit skewed, as all the people surveyed were members of the Banking Industry Architecture Network, a SOA standards group. Twenty-four Tier 1 bank members participated in the survey. Still, the savings estimates are noteworthy and dramatic, and come from those who have been there; the survey also found that 89% of the bankers and vendors have already started or finalized the process of SOA implementation.

"They have some form of SOA, in some cases proprietary SOA," Tesselaar. "In some cases they stopped SOA initiatives three years ago due to different priorities." Some of these companies are revitalizing their SOA initiatives to help reduce costs. "Nowadays you see banks want to get the most out of each dollar they spend," he notes.

The cost cuts will come from easier integrations, Tesselaar says. "If companies can buy off-the-shelf software that integrates well, they can bring their costs down substantially," he says. "If you implement something proprietary, when you have to test it, it's extremely time consuming from the IT side and the user side. If you only have to test the [standardized] components," you can reduce costs dramatically.

All of the bankers surveyed said that SOA will be the dominant accepted IT architecture in banks in the future.

Another interesting finding of the study is that 100% of software vendors envision an "App Store" of sorts for banking software components in the future. About 76% said they envisage this option being available within 10 years, with half expecting this to be available within the next five years.

Tesselaar couldn't guess who might host such a giant app store, but did see this idea as more conceptual. "With the BIAN principles operational, it would be more or less, pick this from A and this from B, it's more the principle than the apps," he says. Banks could put together playlists from different vendors.

"If we can standardize the connectivity part, then it should be good regardless of which vendor uses it," he says.

In other BIAN news, the group announced four new members this week: Bangkok Bank; Tata Consultancy Services; Erste Group; and Singapore Management University, its first academic partnership. Bangkok Bank is its first Asian bank member and the largest commercial bank in Thailand. The university will interconnect core banking solutions using the BIAN service landscape.