New Business You Can Bank On

If that doesn't sound extraordinary, then you obviously haven't provided branch-banking solutions lately. Many of these systems are so old that they predate the automated teller machine (ATM) networks deployed more than two decades ago.

Like so many things, though, the tables have turned. Even the advent of ATM networks wasn't enough to get banks to demand integrated branch-automation systems, so the battle for customer loyalty is putting the branch back at the center of many banks' IT budgets.

According to research by IT consulting firm TowerGroup, in a 30-day period, roughly 93 percent of 5,000 individuals surveyed said they visited their local branch at least once. In addition, TowerGroup predicts that the $2 billion spent on IT at the branch level just two years ago will grow to $2.7 billion in 2004. As a result, some big players are lining up at local branches these days, especially regional and community banks.

For example, IBM, long a dominant player in the banking industry, is furiously attempting to protect its franchise. To do so, it recently unveiled its Branch Transformation Portfolio, which the company describes as a multichannel platform to tie all facets of a bank platform--the ATM network, the branch systems, call centers and the Web--into a common architecture. In keeping with its year-old on-demand computing initiative, IBM calls this strategy Banking on Demand.

The Branch Transformation Portfolio is built on the premise that application logic for branch systems, ATMs, Internet banking and call centers should be the same, rather than the often incompatible silos that exist today, says Mark Tempelmeyer, IBM's vice president of software. "The value to the customer is they have one application to build and support, and it provides consistency across the functions," he says.

The new platform includes software based on the WebSphere and Tivoli platforms, which are designed to tie together these different branch applications. Many key components, such as the eServer Integrated Platform for e-Business, will roll out early next year. IBM has also partnered with Chordiant Software, Cisco, Intel, S1 and Siebel for their respective offerings.

Bob Steele, a vice president at IBM partner John Ryan Center, agrees there's increased demand for integrated branch-automation technology. "To provide bank employees at every level of contact with the customer with good, accurate, timely and consistent information is critical," Steele says.

But IBM and its partners won't have the banking market to themselves. Microsoft has also successfully made inroads of its own. "Microsoft is stepping in and wresting that market by providing Windows-based workstations for tellers and platforms," says TowerGroup analyst Jerry Silva. According to Celent Communications, only 5 percent of all ATM machines were Windows-based, with the rest running on OS/2 and DOS. This year, that figure will be 12 percent, and by 2005, 65 percent.

IBM's antidote for that is Linux. While IBM will offer its branch-automation solution on Windows and Linux, the latter is where the company's heart lies. Tempelmeyer says Linux is more reliable and secure, and is less vulnerable to security problems. "We believe Linux meets the customer need best," he says.

The problem, TowerGroup's Silva says, is that Linux is not yet up to the entire task of running all of these mission-critical applications. So when will that be? Suffice to say it will be a good sign when IBM no longer provides any support for OS/2.