There’s scarcely a bank in the U.S. that doesn’t have an SOA strategy—the competitive pressures to move beyond legacy systems and create a flexible IT environment have filtered their way down to all but the smallest Main Street banks. And though it’s been the next big thing for a handful of years, only a few ISVs have built true SOA components that banks can buy off-the-shelf and implement.

“We have experience building SOA-based software in house for about 10 years,” says Claus Hagen, head of integration architecture at Credit Suisse’s retail and private bank. “What we haven’t seen is good leverage of the concept for standard software in the banking industry. There’s still limited possibility to buy solutions in the market; we think it’s because of lack of standards in that area.”

In response, Credit Suisse has taken a leading role in the newly launched Banking Industry Architecture Network, an industry association with a self-appointed mission to “define and encourage the development of standardized services” in banking.

To the organizers, the imperative for banks to collaborate in the creation of standard services to facilitate the speedier and more economical deployment of SOA is clear. “Seventy percent of a typical (IT) project in banking is spent just on integration,” says Oliver Kling, solution architect for SAP’s global banking line of business. “Integration costs are such a hurdle, projects are not getting done because the integration cost is so high.”

While financial services has created standards in many areas — think payments, AML, others — this appears to be the first group that’s tackling the commoditized services readily receptive to SOA. “I think there’s a lot of banking functionality that is becoming a commodity,” Hagen says. “And this is where banks are spending a lot of money building their own applications.”

BIAN has an impressive roster of European bank members who are committing both membership fees and human resources to the goal, including Deutsche Bank, Deutsche Postbank and ING. And it has some aggressive goals for deliverables; the first will be presented for review this fall, and within three years Kling hopes the body will have addressed 50 percent of what can be standardized in banking services, starting with retail, then private, then commercial banking.

But here’s the rub: the newly formed group has yet to convince any American banks—large or small — to join its ranks, and though the umbilical cord has been officially cut, and many more vendors have since signed on, BIAN can’t hide its roots as an SAP-founded customer group. Members include Microsoft, SunGard, Temenos and of course SAP. Not on the list are any U.S. banks, or IBM — the 800-pound gorilla in SOA with more than 64 percent market share, according to Wintergreen Research.

IBM is cognizant of its role as the industry’s biggest player, and is quick to affirm its support of both technical standards and industry standards in all industries, and technologies. But when it comes to teaming up with SAP and European banks, IBM — which has SOA projects underway in all of the top 20 global banks — doesn’t see the benefit. “I think we’ve been leading the SOA forefront, for so long, I don’t know what value it would provide us to participate in that,” says Karen Parrish, vp, industry solutions at IBM. (c) 2008 Bank Technology News and SourceMedia, Inc. All Rights Reserved.

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