Hogan Systems Inc. and International Business Machines Corp. have joined forces to help banks handle the rising tide of transactions generated by the increased use of alternative delivery channels.
By 2000, banks can expect threefold growth in automated transactions and a sixfold increase in the computing power necessary to complete them, according to International Data Corp., a research firm in Framingham, Mass.
Hogan and IBM executives said their joint project - rigging Hogan's core banking software to run in IBM's Parallel Sysplex hardware environment - should help banks that are making aggressive use of alternative delivery.
"This has very much been a customer-driven initiative for us here in developing for the Sysplex environment," said Roger Neubauer, Hogan's vice president of lending, architecture, and support.
IBM will assist Hogan with testing at Teraplex Center in Poughkeepsie, N.Y. The Hogan software will run on Generation 3 of the System/390 parallel enterprise server, which started shipping in September.
Hogan expects to begin selling the enhanced software in the third quarter. "We have several clients that are looking forward to working with us on this," Mr. Neubauer said.
The cooperation recalls a day when the two companies were more closely linked. IBM once owned a 5% stake in Hogan, but sold it in 1993.
The companies said their relationship this time around is less formal and involves no change in ownership stakes.
The Parallel Sysplex environment on which the project is based makes use of "clustered computing," which allows up to 320 processing units to be linked together and function like "a single logical system to the core banking application," said Tony DiMarco, financial industry consultant for IBM's System/390 division.
One advantage of a clustered architecture is that if one piece of the linked system has an outage, "the rest of your resources are still available to the core banking application," Mr. DiMarco said.
This kind of flexibility is useful to banks that are seeing rapid growth in transactions from call centers, automated teller machines, and home banking programs.
Further, clustered architectures are well suited to real-time banking applications that continuously update the account information to be used by customer service representatives.
The Hogan software is aiming for such continuous update capabilities.
Alternative delivery channels are not the only source of larger transaction volumes. For many banks, mergers bump up volumes to levels that require hardware upgrades. With clustered computing systems, such upgrades can be done more cheaply and smoothly than with legacy systems, experts said.
"We have several large banks today that already see within the next 18 to 24 months where they are outgrowing our current processors that they understand that the budget is not there to maybe go out and upgrade those machines," Mr. Neubauer said.
This may be the technological answer that Hogan's bank clients have been waiting for. "What they would like is a solution that could extent their current hardware as opposed to always just having to go through the capital outlay that is involved in buying the next bigger machine," Mr. Neubauer said.