7 October 2008

Pim van der Horst, chief information officer and director of ICT at KAS Bank

Kas Bank is leading the way in Swift connectivity with the implementation of Microsoft BizTalk Accelerator for Swift. Jacqui Griffiths found out about the project.

Payments systems are critical to the operations of any bank. As the global payments picture develops to include new regulations, new standards, increasing numbers of international transactions and innovative methods of payment, banks are under increasing pressure to ensure that their IT can support them in terms of workload, compliance and competition.

As a supplier of investment management, custody, clearing and settlement services KAS Bank understood these issues only too well. Based in Amsterdam and with 200 years of banking history, KAS Bank is among the top 100 Swift users, with over 95 per cent of its transaction messaging being carried over the Swift network. The company values both past experience and forward-looking innovation, an attitude that is amply illustrated by major IT projects such as its implementation of Microsoft BizTalk Server and BizTalk Accelerator for Swift (A4Swift), a product extension that enables message formatting and connectivity to the Swift network.

The strategic migration of all its banking applications from a mainframe environment onto Microsoft .NET gave KAS Bank the opportunity to optimise its Swift connectivity. “For 20-30 years, we were based on an IBM mainframe,” explains Pim van der Horst, chief information officer and director of ICT at KAS Bank. “We developed quite substantial functionality on that mainframe in an Adabas/Natural environment. However, we wanted to be more agile towards our customers. We wanted to offer them more services, faster, and with 24/7 availability. In addition, we wanted to achieve a shorter time to market for new product development. This was not possible with our actual mainframe infrastructure, so we looked for alternative technologies.”

As part of the migration project, KAS Bank chose A4Swift. “The Swift project was part of the whole mainframe migration,” says Freek Oldenhuis Arwert, business manager for the Enterprise and Partner Group at Microsoft in the Netherlands. “It was a big decision for KAS Bank. Their first choice had been a new mainframe, and they embarked on an extensive selection process involving different technology platforms.”

KAS Bank considered technologies from IBM, Oracle and Microsoft. After extensive benchmark testing at an independent technology institute, Microsoft .NET came out as the winner on both performance and cost. “Microsoft was the fastest at developing new software,” continues Oldenhuis Arwert. “During the selection process, we built the solution in one day, while other parties didn’t finish at all.”

Kas Bank not only has new technology; it also has a much more dynamic environment - more open and flexible

Freek Oldenhuis Arwert, business manager at Microsoft “Performance and cost were both taken into consideration in the decision,” says van der Horst. “We had a high volume of Swift messages, handling 100,000-150,000 per day. This puts us among the top 100 Swift users, which is quite an achievement for a small bank like KAS Bank. Because of this, we wanted to be sure that the new environment was able to handle such a high transaction load. We also calculated what it would cost to develop functions within the different environments. Microsoft surpassed the others in terms of both performance and cost.”

A further concern for KAS Bank was the availability of developers for its new environment, but Microsoft has a very extensive certified partner network throughout the world. “.NET developers are more available than Java or Oracle specialists,” says van der Horst. “In addition, developers for those other environments are much more expensive than .NET developers.”

A WINNING TEAM

A strong working relationship is essential to any major IT project, particularly for such a mission critical area, and this is clearly evident at KAS Bank. “We have a strong partnership with KAS Bank,” says Oldenhuis Arwert. “For the payments project we have a core team on site at the bank, consisting of a strategy consultant, an application architect and an infrastructure architect. A close relationship is important because every organisation is different, with different rules around their workflow. With A4Swift, some of the workflow is tailor-made for them, so of course we work closely together to do that.”

“Two years ago we didn’t have any Microsoft knowledge in-house, only mainframe specialists,” adds van der Horst. “The role of Microsoft both as a facilitator and as a trainer of our people on the job is very important. They provide very specialist knowledge on the project, and we also use Microsoft partners to help us do the hands-on work. It’s clear that our success in this project is also the success of Microsoft, and vice versa, so we have a common interest in achieving tremendous results with what we’re doing at KAS Bank.”

“The project has already led to more interest from other parties,” says Oldenhuis Arwert. “Working with KAS Bank has been enjoyable and informative. The KAS Bank team is always willing to engage in discussions with us, and to explore other alternatives with Microsoft technology.”

For KAS Bank, the relationship is enhanced by the support structure Microsoft offers. “We have a premier support agreement with Microsoft, and we’re also taking part in the rapid deployment programme,” says van der Horst. “We also get high-level support because we’re now running on Vista – we were the first financial institution in the Netherlands to implement Vista across the organisation. In addition, our enterprise licensing agreement with Microsoft helps us to minimise costs.”

KAS Bank has taken the time to ensure it achieves the results it wants, as van der Horst explains: “The broader migration to Windows is likely to continue until 2010, as we don’t have a big-bang strategy for it. We’re moving gradually, so we’ll phase down our use of the mainframe and build up our use of Intel and Microsoft-based platforms simultaneously. In phasing out the mainframe, we’re following several strategies. We’re rebuilding functionality ourselves and developing it in the .NET environment. We may also automate aspects of the migration directly from Adabas/Natural to C# using a conversion tool.

“The Swift project has entailed several phases, because we had a rather complicated architecture and infrastructure. We had to source out the mainframe applications and gradually build up the Microsoft environment. Now we’re at the stage where we’re about to go live, and we’ve already phased out some mainframe applications.”

RAPID RESULTS

Prior to fully going live with the A4Swift system, KAS Bank is using two channels for its Swift messaging. “At this point, not every transaction is going through Microsoft, as we have a mapping issue,” says van der Horst. “We’re putting them onto the new architecture message type by message type.”

Nevertheless, KAS Bank has already started to see the benefits of its Swift agreement. Over the past 12 months, the performance of the system has exceeded expectations. “The system can handle a large message load,” says van der Horst. “We’re very pleased, even a little surprised by its capability. It’s also very stable. The configuration we had on the mainframe, with a lot of packages talking together, caused me a lot of headaches, because the environment was not very stable. With A4Swift, we have much more stability.”

When it comes to saving time and costs, KAS Bank has found A4Swift very rewarding. “One big advantage is that the cost of maintaining the system goes down enormously,” says van der Horst. “Another is that Swift’s November Changes are no longer a headache for us. Before, we had to implement all the changes in different systems; we had to be sure we were complete, and had done every modification necessary, and then we had to test it, which was a lot of work. Now, Swift and Microsoft have taken care of that – we get a new version of A4Swift that contains all the Swift changes. That’s saved us a lot of time, and also reduces operational risk because we only have to test the upgrades against some forms from Microsoft.”

Management savings such as these are also beneficial in terms of compliance. “The environment gives us a more flexible reporting infrastructure,” says van der Horst. “The Swift environment now integrates its reporting services, so we can get a lot of reports on the status of messages out of the system – another process that previously required a lot of work. We’re working on making that functionality available to customers, possibly through SharePoint Portal.”

In fact, van der Horst explains, the project has resulted in significant simplification in KAS Bank’s back office: “When a customer calls to ask where their payment or settlement is, it is now much easier to handle the enquiry yourself, because all the transactions are stored on a SQL Server database, and we can use Microsoft reporting tools.”

That stability has resulted in a notable - and welcome - silence in one aspect of KAS Bank’s customer relationships. “One thing about Swift messaging is that customers simply expect it to work. So when you get it right, nobody really tells you so,” says van der Horst. “But they do complain when you get it wrong. So far, we’ve found that with A4Swift, we don’t receive any complaints!”

MOVING FORWARD

Moving from the mainframe can prove challenging for banks in terms of organisational change, says Oldenhuis Arwert: “KAS Bank not only has new technology,” he explains. “It also has a much more dynamic environment than it was used to – more open and more flexible.”

However, at KAS Bank, the system has not simply gained acceptance from users; it is also building excitement for the future. “Our IT people are quite excited by the system,” says van der Horst. “Coming from decades on the mainframe, they were initially a little wary of the new technology, but in fact they have found it easy to learn and to adapt.”

The relationship between KAS Bank and Microsoft looks set to deliver ongoing benefits in terms of cost, performance and scalability. “As a medium-sized bank, it’s in our interest to standardise on one platform in order to achieve the lowest possible total cost of ownership,” says van der Horst. “We now have a new Swift infrastructure in place, and we’re investigating opportunities to use other Microsoft tools to increase the performance and visibility of that environment. We want to use System Center Operations Manager to monitor the infrastructure, and we’re looking at working with Swift and Microsoft to develop an adapter for that. We can also use reporting tools from Microsoft, as well as SharePoint, to give us a dashboard on the performance of the environment.”

The project has also created a stir outside of KAS Bank’s organisation, says Oldenhuis Arwert: “KAS Bank is among the top three banks for Swift in the Netherlands,” he says. “Other organisations have already contacted them about the Swift migration project – it has created a buzz in the market, for both Microsoft and KAS Bank.”

“Microsoft is looking forward to building on the success of this SwiftNet integration and supporting KAS Bank in its ongoing reengineering efforts throughout its infrastructure,” says Sheida Hadji- Ashrafi, worldwide industry manager for payments at Microsoft. “KAS Bank’s work goes to show that a costeffective integration platform can be the foundation of technology renewal programme. SwiftNet integration is a vital component of this.”

This article first appeared in the Autumn 2008 edition of Finance on Windows magazine.