4 July 2005

Bank Austria Creditanstalt Group (BA-CA), part of the German HypoVereinsbank Group, is Austria's largest bank with a 25 per cent market share and assets totalling €159bn (US$206bn). It also operates the leading international banking network in Central and Eastern Europe (CEE). These markets have witnessed significant growth in the last five years and are viewed as strategically important by many European banking groups as they open up after their accession into the European Union (EU). The bank has pursued a policy of expansion in these countries and in 1991 opened its first CEE operation in Budapest, Hungary.

Today, its award-winning network comprises 988 offices in 11 countries, with more than 17,000 employees serving approximately 4.5m customers. This rapid expansion has been achieved through the purchase of smaller, regional banks, which have become part of the Bank Austria Creditanstalt network.

Wave, a 100 per cent subsidiary of BA-CA, supplies software solutions as well as process design and consulting services to fulfil customers' expectations regarding IT requirements. The mission is to support customers in achieving their business goals through quick, efficient, and high-quality solutions at reasonable costs. Wave is dedicated to providing information services (IS) solutions with respect to increasing market shares and distribution channels, as well as extending the product portfolio. To meet the wide-ranging requirements of universal banks in different countries, functionalities like multi-branching, multi-lingual, multi-entity, and multi-currency are necessary, all of which are provided in an integrated system portfolio. One of the most dynamic sectors in CEE is the consumer loans market, and the bank witnessed a 28 per cent growth in private loans in some CEE countries alone during 2003. However, merger and acquisition activity has left its subsidiaries with manually intensive and error-prone processes. Employees would have to enter customer information – bank account details, current or outstanding loans, and credit history – into a 'scoring' application. The resulting information would then be sent to the branch manager and customer relations manager for a series of manual approvals before a loan was granted.

"There was a lot of administrative work to be done with an application form and customer details which involved manual data entry into different applications and often rekeying the same data," says Werner Mayer, Head of Business Consulting at Wave CEE. "Not only was that incredibly inefficient, there was always scope for human error, which increased risk and could hold the loan up."

As a result, the average loan could take several days to approve. For a bank that prides itself on customer service and looking to increase its market share in an important area, this was unsustainable. Further, many of the subsidiary banks had implemented or developed their own local front-end systems for dealing with loans, which differed from country to country, adding another layer of complexity and higher integration costs. As its network of banks experienced 50 per cent above average year-on- year growth, Bank Austria Creditanstalt wanted to introduce EzY Credit, a single loans solution for its subsidiaries throughout CEE. Bank Austria Creditanstalt has a long-term vision for its banking network and viewed the solution as the start of a wider integration framework based on service- oriented architecture. Its goal was to employ standard tools and interfaces and minimise programming efforts to reduce maintenance costs and simplify the IT infrastructure. Furthermore it was intended that business analysts of the CEE banks have the tools to modify business process on their own without or with minimal IT intervention.

To implement EzY Credit, Bank Austria Creditanstalt turned to its technology and solutions subsidiary, Wave, to evaluate a possible solution using Microsoft BizTalk Server 2004, part of Microsoft Windows Server System integrated server software. It had completed a successful project with Microsoft Croatia that used Microsoft BizTalk Server 2002 and realised it could use a similar solution for EzY Credit.

"Having that solution up and running proved to the bank what could be achieved with industry-proven technology," says Mayer. "The bank was interested in the new features in BizTalk Server 2004 but wanted to produce a proof of concept to see how it would work within the loans process."

Wave designed a proof of concept with BizTalk Server 2004 and Microsoft Office InfoPath 2003 information-gathering program, which broke loan products down into their constituent processes and mapped data flows to study where data was stored and sent. This took four weeks and involved a series of workshops in London, Vienna, and Budapest. Business processes were then designed using BizTalk Server objects created with the Microsoft Visual Studio .NET 2003 development system. A smart client front end was created with the support of InfoPath 2003.

This proved the solution could successfully integrate the bank's standard legacy system, CORE02, and provide an environment for the roll out of new applications to support the integration of new banking products. "From a business perspective this meant the integration of software applications running in different departments, different technological platforms, business areas, or banks into combined process workflows," says Chadi Suleiman, chief expert for application portfolio at Wave CEE. "From a technical perspective the integration of a flexible IT architecture based around BizTalk Server 2004 helped interface different applications, transaction, and back-end systems. This moved the bank away from a product-oriented architecture to one that was based around its products and the underlying business processes. Time-to-market interval could be shortened and thus the bank could save costs and concentrate on its expansion and acquisition activities." To replace legacy green screens and create a more intuitive user interface for the bank's branch network, Wave used Microsoft Visual Studio .NET, a development system designed for building enterprise applications that run on the Microsoft .NET Framework. The .NET Framework is an integral component of the Microsoft Windows operating system that provides a programming model and runtime for Web services, Web applications, and smart client applications. This work was conducted at a Wave Microsoft- certified subsidiary in Budapest as a basis for it becoming a competency centre specialising in Microsoft .NET development projects.

The .NET Framework includes pre-built code components that programmers can use to develop new applications and Web services quickly and easily. It also includes a component called the Common Language Runtime (CLR) that developers can use to write code in their language of choice, ensuring that they are as productive as possible. Less coding ultimately means the Wave team will deliver improved functionality more quickly and cost- effectively. "Doing something in a much more industry standard way, through coherent server technology with coherent management was very appealing because it could save time and money," says Suleiman. "The .NET Framework will bring us significant savings by helping developers create new applications in a highly effective manner and deploy new software functionality across the group in the CEE region."

To date, Wave is implementing the EzY Banking (EzY Credit and EzY Branch) for the daughter bank of BA-CA in Serbia and is currently setting up the EzY Credit project in Romania. Further projects for BA-CA banks in Slovenia, Czech Republic, and Hungary are currently under investigation. One of the key success factors in this project was looking at all of the capabilities in the loan process. Knowing that what is done in a loan process is very much the same across all regions, and the real differences are in how it is done in terms of the different regulations that govern the process, who does the work, the specific procedure that is followed, and how technology is used. Isolating the loan capabilities or what is done, from how it is done, made it easier to see which capabilities could be automated and which could be the same across all regions.

Simplified business processes Bank Austria Creditanstalt's Integration Hub, based on BizTalk Server 2004 and .NET Framework Web services, includes a number of powerful capabilities that will help Bank Austria Creditanstalt's daughter banks in CEE integrate their multiple legacy systems that exist throughout the region. These include the Orchestration Engine and the Orchestration Designer, which provides a visually rich graphical interface to create links between data and coordinate business processes. BizTalk Server 2004 saves a visual workflow into an executable file called an orchestration, which a runtime engine uses to execute business processes. Users are insulated from having to learn code to create the orchestration, speeding up the integration of existing applications. "The orchestration capability gives us a very efficient tool to perform message transformations so that an inbound request from a system can be effectively mapped to an outbound request," says Suleiman.

"This means business analysts within the bank are able to change and modify the process workflow, without expensive IT interaction."

Reduction in loan processing When an internal system, for example, needs to send updated customer information, it does so directly to BizTalk Server 2004, which uses a specialised XML-based rules engine to scrutinise the message. The rules engine determines the origin and destination of the message, imports the information into the system, and conducts additional transformation and routing to other destinations in the bank's network.

In some cases Web services are deployed to offer integration possibilities for systems that are running in the central environment of BA-CA located in Vienna, Austria. This has automated previously manual processes and significantly reduced the risk that incorrect data might be entered. The end result is a faster loan process that requires the agreement to only be signed once by the customer and bank authoriser. Mayer says: "We have already witnessed a very large reduction in the loan cycle by 70 per cent. Eventually, we want to introduce a self-service element to have an agreement on the spot."

Efficient systems integration Because Wave could integrate BizTalk Server 2004 with existing applications and technologies such as Microsoft SQL Server 2000, which is also part of Windows Server System, it was able to get more value out of its investment in technology. As the CEE market expands, the bank will benefit from the ability to integrate efficiently and bring down the costs of new solutions to meet market needs. A future goal of the Integration Hub is to allow the migration of local banking applications to centrally operated transaction systems of BA-CA in Austria.

BizTalk Server 2004 ensures Bank Austria Creditanstalt has an environment-neutral, service-based Integration Hub that will help it integrate different back-end systems and implement Web-based branch applications within the CEE bank network. "We now have in place a standardised set of practices where we can develop or buy new applications to meet customer needs and simply plug them in without having to worry about integration issues," says Mayer.

"It also means that if there are further mergers or acquisitions we do not have to redesign the entire solution. The possibilities this opens up mean Bank Austria Creditanstalt is well positioned to continue as the number one banking network throughout CEE."

Faster time-to-market Wave's subsidiary in Budapest – a Microsoft Certified Partner – has over 50 employees who are experts with the .NET Framework, and this project has reinforced that knowledge and expertise. Their familiarity with Microsoft development tools has decreased both the time and cost of development. In addition, BizTalk Server 2004 features, such as the Health and Activity Tracking (HAT) system and the Administration Console, help simplify the processes of solution testing and debugging by alerting IT staff when a problem occurs in data translation.

"These features provide the bank with a monitoring function that shows where documents are in the system and provides up-to-date information on the status of a loan," says Mayer. "It is a big benefit to the business development teams who can now monitor the efficiency of the processes and determine where changes need to made."

Thanks to the flexibility and interoperability of the .NET Framework, Wave can develop, deploy, and integrate applications for Bank Austria Creditanstalt quickly and easily. A key factor in the ease of development is Xcopy, which copies files and directories and makes it easier to deploy .NET Framework-based applications. Developers can simply copy files over to Internet Information Services (IIS) version 6.0 and run them, rather than having to register each component.

"In such a dynamic sector, time-to-market will always be critical. That is especially true of CEE where the market is opening to new banks. Customer service will be the main difference between many offerings," says Suleiman. "We want to use the same platform in Romania as we do in Serbia and drive customer service as a selling point. By using .NET connection software we can create localised services quickly to meet the specific needs of those markets with minimal reengineering."

Lower IT and training costs In Serbia, the Integration Hub will be used to merge the systems of two subsidiary banks to create a single loan solution for that market. Throughout that processes, Wave worked with Bank Austria Creditanstalt in workshops to ensure it could deliver a user-friendly front end for branch employees. The results, says Suleiman, have been excellent.

"As part of that project we wanted to reduce the overall IT and training overheads compared to the old systems, and so far training costs have been cut by over 70 per cent," he says. "That is due to the InfoPath 2003 front end, which users have found very intuitive and easy to adapt to." For the Bank Austria Creditanstalt Group as a whole, reducing the complexity of the IT infrastructure will pay dividends for years to come. By using a service-oriented architecture, and introducing productivity reporting tools and greater analysis of data workflows, the bank is able to identify areas for improvement in the loan process. This knowledge will then be passed on to other projects as the bank grows its CEE network and becomes product rather than process oriented.

"We believe savings of up to 35 per cent are easily achievable as we roll out this architecture across the group," says Mayer. "Having the same solution across each bank will also reduce maintenance costs by around 30 per cent compared to the old system."

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