Banks' Big Upgrade: Meet Real-Time Processing 89
CWmike writes "It has been years since the banking industry made any large investments in core IT systems, but some of the largest financial services firms in the U.S. are now in the midst of rolling out multi-million dollar projects, say industry experts. About a decade ago, they began replacing decades-old Cobol-based core systems, with open, Web-enabled apps. Now, they are spending more than $100,000,000 to replace aging systems, converting to real-time mobile applications for retail services such as savings and checking accounts and lending systems. The idea behind going real-time: Grab more business — and money — from customers. 'Five of the top 20 banks are engaged in some sort of core banking replacement and we expect to see another three or four in next 12 months,' said Fiaz Sindhu, who leads Accenture's North American core banking practice. 'They're looking at those upgrades as a path to growth.'"
competition (Score:4, Funny)
The banks clearly need more money (Score:1)
I hope the banks get all the money they need to stay afloat.
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You are aware, I trust, that in no small part modern society was built due to banks extending credit.
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Modern society was built by modern builders. They could have done their job fine without banks. To the extent banks are needed, it is only because they have rigged the system.
Fractional reserve banks are parasites. They leech wealth away from their customers, and when that's not enough, they leech it away from taxpayers, and when that's not enough, they leech it away from third world peasants (a group that, thanks to these banks, may well include most Americans within twenty years).
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Here we go with a Libertarian and his imaginary history and imaginary economic system.
Where do you suppose the money came from to pay for mercenary armies in late Medieval and Early Modern Europe? Where do you suppose the money for the Industrial Revolution came from. At the best of times there were damned few people with the ready cash to build a large factory.
Banks are nothing new, and even in Roman times you had money lenders willing to extend credit with interest.
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Read your history. Venitian bankers (probably the first modern bankers) made money hand over fist financing armies. They also funded trade and exploration.
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A MightyMartian once said "You can either debate what I say, or you can just imagine my statements and then respond to those."
Sage words.
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No, I think you misunderstand there is a difference between simply lending at interest and fractional reserve banking.
There is nothing anti-Libertarian about banking and lending. However fractional reserve banking, that is, creating the money by the process of lending, is a fraud.
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Money is inherently an agreement between two parties to create a means of exchange. Do you think the gold standard somehow represents in any better way that means of exchange? Gold, beyond its industrial uses, is simply a different kind of placemarker. Beyond that, why shouldn't a currency be based on the accumulated value of economic input? Why would you base it on a substance that in virtually no way reflects the value of production in a nation?
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And you utterly fail to get it.
Gold has value on its own. Gold has use outside of currency, which means its value is relatively stable, its rarity means you don't need as much of it to have a valuable amount. Society can completely collapse, and gold will still have value as it has direct uses.
Fractional reserve fraud works because you're printing money from thin air. It only has value until the moment people decide it no longer has value. Its giving away your gold, multiple times.
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I do get it. Gold's value beyond manufacturing and industrial uses is simply an agreed upon amount. It is not magically imbued as you think it is. And I ask again, why should a currency's value not reflect the domestic production?
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HAHAHAHAHAHAHAHAHHAHA
Where does a builder, manufacturer, inventor, get the resources needed to build, or design?
Some one has to loan you the stuff you need to get started. then you build, and you build it better/cheaper than expected. you sell it make money and pay back your loan. Whether the loan was financial or material I can guarantee you had to borrow something from someone else to build. Pretty much the only thing you can build 100% on your own with no help what so ever is fire. After that you ne
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Food and my home are the first two things that come to mind, you know, the essentials.
Don't get me wrong, I'd much rather fuck around on the Internet and read slashdot from within my nice airconditioned house and buy my food at the market, but I most certainly CAN do those things myself without anyone elses support, it'd just not be nearly as easy.
Ignoring all that, no one has to loan me anything to get started, I can barter for it with goods I already have collected myself. I don't have to take out a loan
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Boy are you stupid, even if you paid cash for your cars that doesn't mean the dealership did, the contractor on your house took out loans for the materials, etc
Some where and most likely several some where's along the line from trees to iron ore to rocks some one borrowed money from banks to give themselves a temporary push so they could make more money. Just because you don't doesn't mean someone else didn't.
I live within my means. That means I can't buy a house. It is okay my choice. However my busine
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due to
Really? It wouldn't have happened? Bankers created civilisation?
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Wow, where did I say that? You can either debate what I say, or you can just imagine my statements and then respond to those. I'm sure the latter would be easier for you.
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I am aware that bankers take credit (no pun intended) for such, but that's what sociopaths do.
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Take credit for what? Banks extend credit. Bankers work for banks and do the actual extending of credit. The concept of loaning money and paying back over a long period with interest was key to everything from marching armies into battle to building railways and factories.
I'm not defending all the actions of bankers, but good, bad or ugly, the society we live in with all the amenities produced over the last three or four hundred years is based on the extending of credit.
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So you tell me how you finance a factory without borrowing money?
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Save up the money in advance from doing other work?
Its not hard.
But thats not what you mean.
You want to build a factory tomorrow without waiting or doing work to get the resources to build the factory yourself. You want someone else to pay to build your idea without you actually having to do anything buy sigh a piece of paper saying you'll agree to pay the money back ...
Simply put, you are the exact type of person that banks shouldn't loan money too.
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If you have to borrow money for a car, you are spending too much on that car.
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Which is the reason the last car I bought, I mostly bought with a check. (I charged as much as the car dealer is willing to accept on the credit card to get cash back from the card, but it is against my religion to pay interest on the credit card. So that is paid off the next week).
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I just did the same. I paid the credit card off within the grace period as well. I am not religious, but I do not pay interest if I can avoid it in anyway.
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For people of meager means it's more complicated than that, but borrowing from a commercial bank should definitely be avoided.
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For people of meager means it's more complicated than that,
Indeed. it's easy to be all Ayn Rand when you've got the luxury of money in the bank. Not everyone is so fortunate.
if you have a job but no car, then you can choose to either be unemployed with no income or employed with some of your income going towards interest on a car loan.
Re:Car (Score:2)
Nah, don't go all hardline.
When you're at Cash Zero and you need a $4,000 used auto, you borrow it. But then recognize how evil the loan is and crush yourself to pay it off ASAP. I did mine with a Credit Card and not a fixed payment because some months you don't have all $300 for a payment.
Wooh-hoo, realtime, mobile interest rates! (Score:2)
The idea behind going real-time: Grab more business â" and money â" from customers.
Yield-management pricing techniques, like airplane tickets, for everything else in your life.
Just download this handy android banking app that also reports your location data. When you walk by a high-end furniture store it will pop-up a teaser interest rate for any credit card purchases in the next hour.
I can't wait!!!
snail pace of paypal transfer (Score:2)
considering everything is just magnetic ink these days, can someone please explain why is it that paypal transfers still takes a week+ to show up in bank account?
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Because paypal lies to collect interest for as long as possible, which given interests rates are close to 0% is fair enough?
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So paypal can get interest on your money.
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Because PayPal sucks?
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Still seems odd that my Amex charges show up in my account minutes after I buy something...but my transfer from checking to savings (at another bank) or my brokerage takes 3 days.
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Of course. When they are expecting to be paid that is going to be instant. When they can sit on the money for a few days and make interest at your expense they will do that.
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But now they'll spend a hundred million!
They'll fix everything with that amount!
With that money you could cool the tents in Afganistan for almost 2 days or pay the yearly bonus of a CEO or 2.
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ACH transfers take less than 24 hours, they all clear the day they are put in. There is no delay. Within 24 hours of the start EVERYONE knows the completion status, thats the advantage of it being controlled by the fed so banks can't dick with you.
Anyone who says it takes longer is doing it to gain interest from your money before they give it to you. Which is exactly what paypal does. The longer delays you see are because its profitable for them, the person who has the money holds onto it as long as pos
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All banks paypal included use the ACH system and clear checks through the slowest banks and clearing houses available to get more interest. It's an old business model that's been around for ever and will eventually be replaced by real-time systems and a bunch of other possibly scuzzy fee based approaches.
they need update there systems to fix errors like (Score:3)
http://consumerist.com/2011/07/bank-of-america-gives-same-account-number-to-two-customers-deposits-30k-in-social-security-payments.html [consumerist.com]
http://consumerist.com/2011/06/bank-of-america-threatens-to-foreclose-on-homeowner-if-he-doesnt-pay-000-asap.html [consumerist.com]
http://consumerist.com/2011/07/chase-regrets-to-inform-you-and-the-credit-bureaus-that-you-are-dead.html [consumerist.com]
http://consumerist.com/2011/07/bank-of-america-closes-customers-accounts-after-nearly-3-million-in-mysterious-overdrafts.html [consumerist.com]
And yet I bet they still hold our checks... (Score:4, Insightful)
None of this should be taken as meaning they should not modernize. It is just that they have taken this long to realize that they might make more money by being fast than by being slow. I expect they have figured out how to be either, depending on how it benefits them.
Apples, oranges, confusion, and enlightenment (Score:5, Informative)
I currently write financial software targeted at small and mid-sized banks. The article was ... confused, so, let me try to clear it up a bit:
In the computing world, when you say you're going to replace your core systems, you're talking about replacing either the main software or hardware that your systems run on - or both. In the banking world, when you say 'core system' (or 'host system'), you're talking about the software package being used to store your customer's account data, such as Fiserve or Miser.
The article confusingly references both types of changes and appeared to treat them interchangeably.
Similarly, the phrase 'realtime' has a loaded meaning in the banking world. Outside of the banking world, 'realtime' means 'instantaneous', such as 'realtime rendering'. Inside the banking world, realtime means that actions (such as transfers) are submitted directly against the core system, as opposed to a proxying system which determines rates ($/day, max $, etc), fees, and tries to keep track of the active balance vs. ledger balance. The alternative to 'realtime' is 'batch' - where everything is performed in one fell swoop at the end of a day - when you reconcile the day's transactions.
Some transactions - such as inter-bank account to account transfers can usually be handled in 'realtime' even if the core doesn't support it. The necessary proxy can know everything about that bank's transactions, and can guarantee the availability of funds, so it's allowed. External transfers can't be though. Thus the separation between available balance and ledger balance. You can see this on credit card systems too; your payment may show up on the site as being verified, but not yet applied. In fact, with only few exceptions, when money is sent from one location to another, the actual movement is not finalized for a day or two. Both sides make note of it, so funds are made available, but it can be cancelled or reversed at any point in time before that.
In any case in the banking world, mobile or web (or even atm and point-of-sale teller terminals) don't care much about whether the backend core is in realtime or batch mode. It has nothing to do whatsoever with that functionality. Those are just pieces of software that hook into the core - and the core (or adapters for it) must support that functionality.
Whew! It was hard to read that article with the mixing of those definitions and a base misunderstanding of their purposes.
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You don't actually expect them to know this? We still have 27 years until the world really comes to end.
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mod parent up.
I learned more from that one post that I did in my entire time in reform school. er, I mean, high school.
(seriously, that post was quite informative. appreciate the inside view, we never get to see that.)
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Sorry mate:
It's a hard change for them to make as a very large percentage of the old mainframe folks just don't consider anything but the batch approach.
The old mainframe folks are likely employed doing the sort of work they have done for longer than you have been alive. They know from experience what works and what does not. The batch approach is reliable, understood and suitable for the problem they have been tasked to solve.
I don't know the number of times I've tried to explain the concept of queue based 'as soon as possible' processing or some other non-batch approach to those that grew up in the lameframe/COBOL world.
I would like to hear what the mainframe programmers thought when they were told that everything they have been doing for the past thirty years is wrong by a Slashdotter that uses the term "lameframes".
I hope they're taking the opportunity to decouple things and rewrite things in a more maintainable manner.
Batch processing is
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The mainframe hasn't been all batch since about 1973 when CICS was released and I've worked in several places that used MQSeries. You must have worked at some odd places. I hear you on the spaghetti code front, but if any of the systems written now survives 30 years I bet they'll be just as bad.
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I'm an ex-COBOL man myself and although I have come across "that's the way we've always done it", the majority of places (13 I think) that I worked in wanted to try new stuff as much as possible, especially after Y2K. I never worked anywhere where there wasn't online terminal based software where a batch approach would be impossible to do and the last place I worked had a website that used MQSeries to get information from the CICS backend.
Speaking personally I've gone from COBOL to VBA to C# and ASP.NET at
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CICS went generally available in 1969, not 1973. It did move from Palo Alto to Hursley, UK around 1973 though.
In any case, retail banks mainly used IMS rather than CICS, which was more dominant in utilities (it was first developed at Chicago Power and Light) and insurance.
The retail banking IMS systems were mainly written in assembler not COBOL. In IMS PL/1 was as likely to be used as COBOL.
This is not new (Score:2)
I've been able to do a transaction, and see it deposited/deducted from my account in less than a second. And have been able to since about 1997, when I started online banking.. But I guess that's another reason credit unions rock.
Now if only I could figure out why Visa insists on holding CC transactions for 3 days..
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You might want to call you bank and ask if that money is immediately available. Yeah, it shows up right away, but when does the money really move? I'll wager at about 2 AM in the morning.
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Can't speak to the parent's credit union, but at my small CU - yes, the funds are immediately available. I can have a $100 balance, deposit a $500 check, and walk right outside and withdraw $300 from the ATM.
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It's not because the money is actually available. It still needs to snake it's way through the Federal ACH. The bank trusts the that the check is good and the $300 you leave with is more like a loan. Try to do that with a larger amount and you may have a problem. For example, my bank will let me walk out with a few hundred after depositing a check but I once had to wait almost a week for a $2500 check from an insurance company to clear before they would let me use that money.
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That's typically if you do it via ATM or don't ask for the funds to be available right away. My business account's limit is $1K
However, a few times I've asked for the funds to be made available right away, and the manager or assistant manager would take the check and do some magic in the back and then the funds ($3-4K) would be available.
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There are two states for payments - initiated and posted.
Initiated is when you write a check or use your credit card. Posted is when the money ends up in their final accounts. Initiation takes place in practically real time (they have ot make sure the money's there after all) at which point the funds are "locked", but the actual posting depends on the evidence being presented.
The thing with cheques is that it's often sent through the mail, so you get a day or two of "float" before the actual initiation begi
Not quite (Score:5, Informative)
We haven't been replacing those aging COBOL-based apps - that's a massive infrastructure that is well proven and works.
When you have systems that churn through billions of daily transactions across millions of accounts, you don't just swap out the systems that do that processing if those systems are working well. It's not glamorous, but it's reliable and it works - and is not prone to new (and expensive) bugs that come with new development.
No, what happened a few years ago was that we started upgrading the hardware and building new, more modern layers to fit on top of those back end systems. But replace them? Replacement is something that is happening very, very slowly. Think of it like erosion - the edges get worn down, we shore them up here and there. And when we have NO other choice, we replace them.
We all ooh and aah over our 1000-TPS Weblogic systems - but forget that the backend COBOL applications are quietly handling all of that load and more.
Fortunately, I'm not involved in the "legacy" systems, so I can be one of those marveling over how fast our Java stack is ;)
These statements are my opinion and not representative of the beliefs or actions of my employer. etc, etc
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haha, re replaced our system to get rid of those evil COBOL batch process and go to real time.
Now we just rub a process at night to update our info.
Plus it's less reliable and more expensive.
Way to go upper management.
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Our real-time systems are COBOL as well...
Honestly, there's nothing wrong with (as long as I don' thave to maintain it), and it does work. On the other hand, based on the reports we get from that team, it makes it impossible for them to change anything without speccing it out a year ahead of time...
Debits are already real time. (Score:4, Insightful)
Deposits? Pneumatic tube to the abacus room.
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Pneumatic tubes.
Some say they suck, others say they blow. I just think they're a blast.
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Nope. The current state for most banks run process on a overnight cycle.
So if you transfer $1 from checking to savings it will happen overnight.
If you buy something at a retail store with a check, what normally happens is that
1. the retail store closes it's book at the end of the day and sends the data to their bank.
2. The retailer's bank sends the data to your bank overnight.
3. Your bank processes the data on their overnight cycle.
So the next time you buy something with your check
Comment removed (Score:4, Insightful)
Re:Effects of Hyper Inflation (Score:4, Informative)
Welcome to Slashdot!
"... upgrades as a path to... existence." FTFY (Score:2)
A lot of people I know have given up their bank accounts altogether. Too many fees, too much BS. At a time when the banks should have been wooing customers with better deals, they piled on the fees and cut service.
Let 'em fail. If they bring back good service at a decent price, well, okay. But the whole fractional-reserve banking system in thi
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Perhaps you are grandfathered in? I got a TD Bank checking account a few years back where the main feature of the account was that it had no minimum balance. A few months later they added a minimum balance which I never realised until I saw that I had been dinged with multiple low balance fees on a statement I happened to check. The terms on this account I have seem to change month to month. Now I watch it like a hawk whereas before I was under the impression I could drop money into it every once and a
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"for now, if Congress and the fed squeeze the banks enough they might impose one"
See? You are illustrating my point. You know very well that if they are "squeezed", rather than luring new customers by giving better service, they will (and have) impose harsher conditions on their existing customers instead. No, that is NOT inevitable. It's just plain bad business. Banks have had it both ways for so long that they just don't seem to know what good business is anymore.
Take your money out. Let 'em fail. Just don't do it all at once.
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Look guys, the Coward gets it!
Takes 1 second for bank to accept my money (Score:2)
and 3 days to 2 weeks to clear a check and credit it to me. Hmmm.
Definitely some room for improvement.