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Architecture for Enterprise Integration in Banking

Industry
Maria Fatima
Department of Computer Science, Institute of Business Administration
Email: m.fatima@khi.iba.edu.pk

Zareen Zia Khan


Department of Computer Science, Institute of Business Administration
Email: zareen.ziakhan@khi.iba.edu.pk

Muhammad Uzair Siddiqui


Department of Computer Science, Institute of Business Administration
Email: uzair.siddiqui@khi.iba.edu.pk

Dr. Waqas Mehmood


Department of Computer Science, Institute of Business Administration
Email: wmehmood@iba.edu.pk

Abstract

Implementation or adoption of new core banking solutions is always a critical issue for any bank as the
legacy system is good enough to fulfill their needs and their users are very much comfortable with the
system interface, they usually don’t support such decisions. But due to some circumstances,
management has to go for a new system due to the performance issue, old system is not flexible enough
to embrace new features and upgrading to new technology. In this paper, we are proposing an
architecture which can help you in the integration of both core banking solutions, legacy and new
system.

Keywords: Middleware, JMS Queues, Core Banking System, Web Services, SOAP

Introduction

Nowadays software architecture approaches have been a topic of discussions. The most famous
architecture is Service Oriented Architecture (SOA). The legacy applications have a major impact on the
integration frameworks of the dated technologies. Some business such as core banking has urgency in
their business. Hence, Service Oriented Architecture can serve its purpose. We need to have a better
understanding of Service oriented architecture. Therefore, in this paper we will study the value of
Service Oriented Architecture on banking institutions and will consider the impact it will have on the
bank, customers, operations and overall profitability.

Indeed, the latest upsurge in technology has helped the global competitors to keep a pace. This has
continued to develop and a global competition and thus have resulted in overall digitalization. Service
Oriented Architecture is the most technical development that has attracted many banks and has a
growing adoption rate. Through banking, we can study the Service oriented architecture quite deeply.
Since banks are struggling with legacy system that sounds were difficult to integrate or upgrade. The
reason being that a mishap in these systems can compromise bank’s overall profitability and growth.
The older banking architecture can be referred to as “closed architecture” which hinders software and
hardware to rely on singly handed vendor. This closed architecture causes an impediment in the banks’
ability for innovation and development.

Middleware products are the most useful product in banking industry to implement the integration of
surrounding applications with the core banking software. With the help of the services, we can integrate
as many applications as we want with the banking system. Services provides your code reusability as
your bank accounting books can be hit from different channels like ADC Channel, branch, mobile
applications, internet banking etc. For different channels you do not have to code separately, you have
to just call a single service.

With the help of middleware and Service Oriented Architecture, we will propose architecture in this
paper which will help to run two different core banking solutions simultaneously.

Background

Core banking solution is the main software of bank that contains all the modules like general banking,
credit, trade etc. Any banking transaction is actually comprises of two activities i.e. debit and credit.
Debit means from where the amount is deducted and credit means where amount is going to be added.
Sometime a scenario gets occurred where legacy system of bank is not supporting further maintenance
and extension of business so in this scenario management usually decides to adopt any new solution to
fulfill their requirement and keep them updated in the industry.

When management finalizes a new solution, here the part of integration occurs which focuses on how
both the system i.e. legacy and new adopted one, will work together. One possibility of implementation
of the new system is Big Bank implementation. Big Bank implementation actually means start using the
application in all the branches now onwards. It needs the migration of data of legacy system into the
new system. This type of implementation has some risk like if any bug will come in new system how you
will mitigate it, if the new system doesn’t able to fulfill any of your business process what you will do
etc.

Another type of implementation is branch by branch. It will become less risky if you will run the new
system on any small branch where you have few customers and there is no huge load of transactions.
This type of branch will help you to analyze the new system and you will be able to fix all type of issues
in new systems before applying it on any big or most profit-generating branch. In this type of
implementation, we have to run both the legacy and new system in parallel. As both the systems have
their own ledger and accounts, it will become difficult to maintain the accounting books. Hence, we
need an architecture that how both the systems will work.

In this paper, we are proposing architecture to resolve this problem with high quality of performance as
this issue is related to banking transactions and we can understand that a huge amount of transactions
can be posted in a minute from ATM or any other channel so the performance of the system should be
efficient.

Literature Review

In this paper, authors have mentioned that when they tried to search the literature review on SOA
architecture in e-banking, they didn’t find any meaningful researches so they adopted the strategy to
find the benefits of SOA architecture and e-banking solutions separately. As customers are trying to
embrace branchless banking and e-banking solutions are being widely use internationally, the best
architecture which can support is SOA architecture. SOA is very helpful to maintain multiple channels; it
will improve the reusability of services, reduced the downtime of system. In this paper they have
mentioned the importance of SOA architecture in e-banking using a case study of a bank and found
some more benefits of this architecture. Also they enhance the architecture to accommodate the
identified benefits in system. (Basias, Themistocleous and Morabito, An Investigation of Benefits
Affecting SOA Adoption in e-banking June 2014)

E-banking is growing fast due to its several benefits. As we hear the word of e-banking, the very next
thing which comes in our mind is integration as integration is very important for e-banking successful
implementation. SOA is a best approach for integration but many banks have failed to achieve it, one of
the reason is we don’t have any proper method or strategy defined anywhere that how should we
implement SOA for e-banking solution. In this paper authors have proposed a decision making
framework which can help in implementation of SOA architecture. Also they have test this framework
using a case study of a bank (Basias, Themistocleous and Morabito, A Decision Making Framework for
SOA Adoption in e-Banking: A Case Study Approach January 2015)

In this paper authors have mentioned a case study related to banking industry which focuses on how
banks can use SOA architecture to build any system by reducing the cost and risk and how you can
improve the customer experience. They have mentioned the existing challenges then they proposed
architecture that how you can overcome those issues by adopting SOA architecture (Keen, et al. 2009)

Digital banking transformation is the most buzz word these days as by this transformation, banks are
trying to improve the customer experiences by adopting new channels like mobile banking, social media
etc. Traditional banks are reluctant to adopt digital banking due to the presence of legacy system as
these systems are very reliable and still high performing and uncompromising to adopt modern
technologies. In this paper authors have mentioned a solution to overcome this problem is the use of
SOA architecture using efficient architected Enterprise Service Bus technology (MEGARGEL,
SHANKARARAMAN and FAN 2018)

Web service is a way to communicate the data over network. Once web service is designed, it can be
consume in any application by its URL (uniform resource locator). Web services can be of two
interaction styles: SOAP (simple object access protocol) and REST (representational state transfer
protocol). Selection of suitable interaction style is very important for developers before designing the
web service as this decision plays an important in the architecture of any solution. Comparison between
SOAP and REST services is defined in this paper (Kumari and Rath 2015)

Middleware is used to configure and manage the services appropriately. In this article author has
mentioned different ways in which you can use middleware, one of the best use among this is in micro
service architecture. This architecture proposes to develop service in small chunks or module and deploy
it on different servers so that it will become easy to balance the server traffic. (Piech 2015)

MOM (Message Oriented Middleware) is a technology to develop enterprise application. It helps to


integrate the surround system together and transfer the asynchronous messages. The JMS (Java
Message Service) API is developed on the basic architecture of MOM technology and helps to compose
large scale enterprise application using JAVA standards. In this paper authors have defined different
types of messages i.e. Point-To-Point and Publish/Subscribe. They evaluated the Quality of Service of
JMS on following attributes: Persistent/Non-Persistent, Durable/Non-Durable and Transactional/Non-
Transactional. (Chen and Greenfield 2004)

In this paper, authors have defined how the integration technologies have been evolved from Remote
Procedure Calls to Middleware, how web services have progressed in the meantime. Middleware is
actually a layer between applications and service layer. (Emmerich, Aoyama and Sventek August 2008)

Conceptual Model

With the help of literature review and our research, we are able to design architecture which will
execute two core banking solutions simultaneously, effectively and efficiently. There will be no loss of
data or miss transaction in this design. We have a rule of thumb for this architecture which says if debit
has done, credit must be done. Service bus from different vendors is available which facilitate such a
design with their queue mechanism. Queues are very beneficial to manage the load of the transactions
and data integrity.

In our architecture, there should be a database which holds the information that which branch is using
which system. Let’s consider we have two systems, system A and system B. In every transaction, two
accounts must be hit, debit account and credit account. These could be customer account or GL
accounts. GL accounts are basically that type of account which helps in managing the accounting books
of branches. At the end of fiscal year, these GL accounts help to calculate the income of bank branch
wise. There is a standard list of GL accounts which is provided by State Bank of Pakistan and which every
bank is following. Along with this, some banks have their own list of accounts as well.

In this design we have 3 different services and 2 different queues which are listed below:

Services:
1. Service for posting debit transaction.
2. Service for posting credit transaction.
3. Service to manage transactions which have error.
JMS Queues:
In the queue settings, we can configure the time interval to move the request from one queue to
another queue. We will have following queues in our design:

1. Credit Queue.
2. Error Queue.

1. Service for posting debit transaction


At the start of this service, we will check the branch of the debit account. If it is being run on system A
then the debit part of transaction will be posted in that system else if the branch is on system B,
transaction will be posted on system B. If any error will arise during the posting, transaction will be
rolled back and a proper message will be shown on screen. Once the debit transaction has been posted
successfully, credit part will be pushed in queue which we will call credit queue.

2. Service for posting credit transaction


In this service, we will check the branch of credit account and post the transaction accordingly. If any
error will come in posting the credit transaction, service will retry to post it how many number of times
you will configure in settings of queue. If all the attempts have been done and still unable to post the
transaction, this request will move into queue which we call error queue so that system will not get
stuck and further transaction will be entertained.

3. Service to manage transactions which have error


As per the configuration of interval in queue settings, transactions will move from error queues to credit
queues so that credit should be done and complete transaction will get posted.
Fig 1. Proposed design of service for posting debit transaction
Conclusion

In this paper, we have addressed a problem statement related to the execution of multiple core banking
system in parallel. After going through a lot of literature, we have designed an architecture which we
have explained in depth in the Conceptual Model section. This design is very efficient in performance.
There will be no loss of transactions using this design as we are using JMS Queues in it which supports
asynchronous message receiving.

References

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