Microsoft Solutions for:

Introduction

Not since the Roman Empire has so much of Europe accepted the same legal tender and the same central financial control over economic policy.

As we reach a new millennium, the politicians of Europe have created a challenge to the banking industry probably greater than anything it has faced before – Euroland. Not since the Roman Empire has so much of Europe accepted the same legal tender and the same central financial control over economic policy.

A universally agreed strategic direction for retail banking has yet to emerge, with arguments for breadth and Europe-wide reach, countered by proponents of specialisation and local focus.

The implications for the banking industry must now be worked through. Central to these issues and challenges is the role of technology. Typically consuming 12% of banking operating costs, IT provides the ability for an institution to operate and serve customers across the continent efficiently and instantly. To be truly effective, however, technology must be the servant of business needs, not the master. Without a proper appreciation of the business issues facing the banking sector, IT is at best a blunt instrument.

A universally agreed strategic direction for retail banking has yet to emerge, with arguments for breadth and Europe-wide reach, countered by proponents of specialisation and local focus. At the same time, the rate of growth and importance of new channels such as online banking are uncertain. The take-up and demand for many new products is untested.

In this environment, only a few central tenets can be stated with any degree of certainty:

· Costs must come down. Margin pressure, particularly on traditional commodity businesses, will only increase in Euroland;

· Products must develop to service the changing needs of customers in a world of low interest rates and more liquid capital markets;

· The customer must be central. There is still much to do in moving from product-focused systems. Collection, analysis and use of customer information will be critical.

Corporate banking will continue to remain a central and profitable component of business for Europe's retail banks.

Corporate banking will continue to remain a central and profitable component of business for Europe's retail banks, particularly those targeting the mid-market, but there are threats ahead. As companies continue to grow the proportion of funding derived from capital-market financing, the volume of 'traditional' lending income received by banks will continue to decline. In order to overcome these losses, banks will have to:

· Build the fee and service based proportion of their revenues;

· Increase the use of electronic interaction with their corporate customers to enhance existing levels of service, reduce costs and offer new products and services;

· Increase the use of customer information systems to enhance risk management techniques and to develop targeted marketing and selling campaigns.

Within European financial markets, future strategies advocated include:

· Get big. Only a relatively few companies have the financial resources to play in the major league of traders. If an oligopolistic environment can be created, over the long-term the major investment houses should be able to generate good returns. M&A will continue;

· Focus on building scale in non-trading areas. Venture capital, investment management and custody services are possibilities;

· Build brands where it matters, particularly on the smaller corporate side. This protects the bank from the commoditisation inherent in lending and borrowing. Big corporates have the bargaining power to reduce prices significantly;

· Build integrated financial management services for mid tier accounts. As with consumer services, client lock-in (and premium pricing) can be achieved through offering a seamless combination of investment, hedging, foreign exchange and insurance products in a quasi-outsourced fashion.

But certain issues need to be addressed:

· Costs must be reduced or variabilised, through more efficient IT investment, outsourcing of certain, primarily back office, operations and reducing the bargaining power of certain employee groups;

· Risk must be managed on a corporate-wide basis with the right information being available to the right people at the right time;

· Analytical capabilities at the trading desk must continue to develop, as banks compete in more and more sophisticated and complex markets;

· The whole business cycle from analysis, marketing, execution and through to settlement must be speeded up to gain competitive advantage and reduce costs.

Euroland brings specific challenges and issues, but primarily it increases the force of existing business pressures.

Overall summary

European banking is entering a new period of opportunities and threats. Euroland brings specific challenges and issues, but primarily it increases the force of existing business pressures. Whether in retail banking, corporate banking or financial markets, certain key themes will continue to dominate the thinking and strategies of financial institutions:

· The need to provide customer value and therefore profit through new products and services as traditional sources of income dry up;

· The need to contain or reduce costs, including IT costs, as new entrants and aggressive competitors impact the market;

· The need to integrate data rapidly and effectively in order to manage risks and enhance customer relationships.

These are tough challenges and there is no magic bullet solution. Achieving shareholder value will, as always, rest on a lot of determined, unsung hard work by all the employees of the bank.

But as well as challenges, there are also opportunities. Euroland is a vast economic space, rivalling the United States in its potential. Undoubtedly some European institutions will develop continent-wide leadership, either in mainstream or niche sectors of the banking industry. This is a tremendous prize.

The following pages outline how Microsoft's technology and the abilities of its partners can play a role in helping the banking industry to respond and prosper.

Retail banking business issues

Not only are banks facing competition from other retail banks within their own geographical region, but also from retail banks in other areas as well as non- and near-banking institutions.

The world of retail banking is in a state of upheaval. The competitive pressure facing retail banks is at an unprecedented level. Not only are banks facing competition from other retail banks within their own geographical region, but also from retail banks in other areas as well as non- and near-banking institutions. While it is often said that a business should not be driven by technology but by a business case which then puts best-of-breed technology to use, it is also true that to be unaware of the fresh opportunities presented by new technologies is to risk missing a market opportunity. But there are a number of other forces pushing retail banks to move fast if they are to adapt successfully to changing conditions.

Banking and non-banking competition

All banks are under pressure to increase their return on capital, to improve profitability and to concentrate on building profitable core business.

It is of paramount importance that banks are able to understand the profitability of their customers.

It is perceived that many European countries, such as Germany, Switzerland and the Netherlands are over-banked. In an over-banked market, those institutions which fail to perform will become likely take-over targets. Cross border merger activity has become more common and deregulation has, to varying degrees, driven consolidation. All banks are under pressure to increase their return on capital, to improve profitability and to concentrate on building profitable core business. Increased competition is attacking the banks' customer base, the retention of which previously relied heavily on consumer inertia. While creating strategies to retain and expand their customer base, it is of paramount importance that banks are able to understand the profitability of their customers – retaining non profitable customers can be costly. Therefore the core banking systems deployed must not only facilitate transactions, but must also provide the information needed in order for banks to better understand their customers.

The attack from non-banks is coming from various sectors.

The Internet has swept away physical boundaries.

The attack from non-banks is coming from various sectors; credit cards were the first to be targeted, notably by telecommunications providers such as AT&T, car manufacturers such as Ford, General Motors and Volkswagen, utilities such as British Gas with its Goldfish card – and by foreign banks, keen to expand into new territories. The move on credit cards has proved to be the prelude to encroachment by non-banks on a whole range of retail banking services. Customers understand that you don't have to be a bank to issue a credit card. Of greater interest is the proposition that you do not need to be a bank to offer personal banking services.

The entry of retail groups such as Marks & Spencer, Quelle and Virgin into selling personal financial products has been viewed as a portent of things to come. Insurance companies, such as the Prudential Insurance group have set up their own banks to offer savings accounts and mortgages. Now supermarket groups are flexing their muscles in financial services, and are offering savings accounts, current accounts and credit cards.

The maturing of the Internet as a realistic delivery channel for commerce has swept away physical boundaries and allows banks and non-banks alike to invade new territories at low cost.

Regulatory barriers may pose problems in the short term but should not be seen as a long term obstacle, particularly as the network effect of the Internet begins to break down resistance to cross-border commerce.

As barriers to entry tumble, banks must now focus on retaining and extending their customer base. But defensive measures are not enough. All too often, banks struggle to make money out of personal current accounts and have little or no idea which of their customers are profitable. To avoid acquiring more unprofitable customers, or losing their profitable customers, much better customer information is called for.

One response of the bigger banks has been to cut operational costs by closing physical bank branches. Those that remain open are changing to deal with more consultancy and profit intensive business.

Cost-effective delivery channels

One response of the bigger banks has been to cut operational costs by closing physical bank branches, or by encouraging customers to move to alternative delivery channels. This clear trend in providing customer service through remote mechanisms does not mean that the branch as a delivery channel is disappearing. Much more, the role of the branch is evolving – from a contact point for transaction processing to a customer relationship centre. Branches that remain open are changing to deal with more consultancy and profit intensive business. While care can be taken to minimise any customer backlash, the reduction in branches may alienate existing customers unless there is some perceived new benefit on offer, such as a phone banking service. Yet this comes at a time when customers are demanding better service with greater convenience – longer hours of service, more points of contact – so great care is needed in managing this transition.

Financial institutions are recognising how technology can be better applied to their business – to provide the backbone they require in order to compete within the changing marketplace.

The paradox is that in order to increase return on equity, banks need to reduce their costs while at the same time improving customer service. This is not an impossible task, because the maturing electronic delivery channels do have the potential to provide better service at lower cost, and to capture much more detailed customer information with which to target marketing efforts. Financial institutions are recognising how technology can be better applied to their business – to provide the backbone they require in order to compete within the changing marketplace.

In particular, multiple delivery channels are allowing financial institutions to respond to the changing requirements of their customers, to offer a service to the customer, anytime, anywhere through a combination of contact points which can include telephones, PCs, television, the Internet or multimedia-based self service kiosks. However, while the use of multiple delivery channels offers a solution to the changing demands of the customer, the emergence of these delivery channels creates increased complexity and puts new demands upon customer and information management.

Customer management

A high standard of customer service has to be offered across all available delivery channels.

In order to enhance service delivery, banks have been reaching out to integrate new delivery channels. A high standard of customer service has to be offered across all available delivery channels – meeting the demands of customers to secure their loyalty. This requires a stronger emphasis on customer relationship management – particularly due to the increased demands of a well informed customer base.

In particular, the emergence of the Internet has provided banks with a cost effective delivery channel allowing them to reach out to customers across geographical boundaries and without time constraints. Although the Internet is probably the most hyped of the alternatives, the advantages of expanding delivery channels such as the call centre and self service kiosks should not be neglected.

Call centres

The telephone can now be embraced to provide more complex and indeed higher value services.

The use of call centres for telephone banking allows banks to provide services at a fraction of the traditional branch environment. The falling costs of telecommunications services has positioned the telephone as an attractive, cost-effective channel for providing banking services. This channel can now be embraced to provide more complex and indeed higher value services.

Self-service

The self-service delivery channel is fundamental in bridging the gap between the technology haves and have-nots in the general population.

Based around the success of traditional Automated Teller Machines (ATMs), the potential of self-service delivery to support more complex and high value services has been recognised. Services beyond cash dispensing, balance enquiry and mini-statements are being implemented. The self-service delivery channel has an important part to play in meeting the customers' demands for anytime, anywhere banking. This delivery channel is also fundamental in bridging the gap between the technology haves and have-nots in the general population. Indeed, the anonymity of a self service device for 'what-if' type calculations can be advantageous to those customers too inhibited initially to want to discuss personal financial issues with a consultant.

Electronic banking

Online banking offers better and more personalised standards of customer service than have ever been achievable before.

Online banking may be provided in a variety of ways – through the Internet or over a private network, perhaps using a web browser or a personal financial manager package as the front end. Online banking pioneers have already created and implemented Internet-based transactional banking services. Some have chosen a web browser front end, which gives the bank complete control over the 'look and feel' of the customer interface. Others choose Microsoft® Money for the front end, which gives customers a personal financial management package – providing functionality such as account management, budgeting and pension planning – as well as access to the online financial services. Online banking offers better and more personalised standards of customer service than have ever been achievable before. When coupled with an intelligent data warehousing system, sophisticated profiled services can be offered to customers.

For example, the customer logging on could be provided with advice about appropriate savings products, personally tailored from the bank's knowledge of that customer's current financial standing and requirements. At present, customers are too often irritated by poorly targeted mailshots. In future, the imaginative use of technology will enable the delivery of highly customised, personalised services.

As consumer familiarity with different channels increases, industry observers expect demand to grow for an identical service which can be accessed from one of many points of contact.

Up until now, different delivery channels have been used to offer distinct products to discrete customer segments – one type of service aimed at phone bank customers, another for PC bank customers, yet another for traditional branch customers. But as consumer familiarity with different channels increases, industry observers expect demand to grow for an identical service which can be accessed from one or any of these points of contact – from the PC at home, from a kiosk in the shopping mall or transport interchange, or from a mobile phone while on the move. To facilitate such a service the bank must have an integrated view of the customer – multiple points of contact with a single customer view. The bank best able to deliver a real-time service through such multiple channels will hold a distinct advantage.

The key to achieving an IT architecture which is flexible and reliable, but which has a lower total cost of ownership, is the ability to reuse business components across multiple delivery channels.

While the advantages of harnessing multiple delivery channels is clear, it is also imperative that a consistent graphical user interface ('look and feel') across all delivery channels is implemented – projecting a consistent branded image and a familiar navigation environment for the customer. On the face of it, each new delivery channel merely adds to overall operating costs. The answer is to have an IT architecture which is flexible and reliable, but which has a lower total cost of ownership. The key to achieving this is the ability to reuse business components across these multiple delivery channels – reusing the core business logic and only adapting the delivery channel specific sub-components, such as support for card reader units, as required.

In designing this architectural framework, the key business objectives must be kept clearly in mind:

· Retain and expand the profitable customer base;

· Achieve a single view of the customer irrespective of the point-of-contact that the customer has chosen;

· Provide a consistent service to the customer through the channel(s) of his/her choice, any time, anywhere;

· Make cost effective use of existing channels and infrastructure;

· Reduce total cost of ownership of IT systems;

· Reduce development costs and time-to-market for new products.

Financial institutions are the best sources of the information required to develop and deliver products, putting them in an excellent position for the future.

Using technology as the enabler, banks and non-banks can provide the levels of service required by their customer base, and can continue to move to retain their competitive position within the marketplace. The challenges for the modern institution are great, but banks have the opportunity to win.

Financial products are essentially information. Financial institutions are the best sources of the information required to develop and deliver those products, putting them in an excellent position for the future.

Financial Markets business issues

Key among the factors influencing the financial markets is a need for flexibility and rapid action to respond to market opportunities.

Microsoft has recognised the pre-eminence of financial market practitioners in their innovative use and application of the latest technology. This multi-billion dollar business is global in its scope, complex in its business and dominant in its influence throughout industry. Key among the factors influencing this sector is a need for flexibility and rapid action to respond to market opportunities. The life span of some traded instruments may be very short. For example new derivative products are evolving regularly and in order to exploit profitable niches and handle ever-more complicated instruments, firms require systems that can be changed or adapted quickly. Speed and cost of such responses are critical.

External factors such as the introduction of the European single currency and the Year 2000 issue have placed an enormous burden on the IT and business infrastructures of a typical financial institution, with many firms making a huge investment in preparing for these events. The euro, for example, will bring new products and services in sector research, debt derivative products and an increase in insurance of euro-based equity (stock) products – all of which will require the implementation of new applications and systems.

Rapid application development (RAD) is a vital methodology if an institution is to keep pace with the changing nature of business.

The defining market characteristic is the existence of monolithic systems which reduce the ability of an institution to respond to these rapid changes. Rapid application development (RAD) is a vital methodology if an institution is to keep pace with the changing nature of business. By using a homogeneous operating system environment – Microsoft® Windows NT® – the application of reusable COM-based objects across each product group becomes a reality. This allows the institution not only to swiftly respond to the demands of a changing market, but to do so in a cost effective and efficient manner.

Improved reporting

This rapid pace of change in the markets, coupled with the spread of new instruments, has also driven the requirements for greater control and better reporting of market activities. The need to have total systems integration is epitomised by a firm's collateral management system which receives information from many different areas of an institution's trading activities to consolidate its firm-wide collateral position. The volumes, complexities and speed of the global electronic trading markets bring with them major risks. Derivatives in particular may deliver massive profits, but also have the potential for huge and sudden losses. Too often it has appeared that a contributory factor in such losses has been a lack of understanding of the nature of the risks on the part of management, and/or a failure of local day-to-day monitoring of positions and control over risks.

Risk management

Regulators worldwide have expressed concern that the growth of new markets in exotic instruments may promote instability and place a question mark over the solidity of sound institutions.

In response, firms are placing much more emphasis on risk management, calling for the ability to keep a close check on risk exposure throughout the business at all times. In this they are driven not only by concern for their own profitability, and management of market, credit and operational risk, but also by outside pressure. Regulators worldwide have expressed concern that the growth of new markets in exotic instruments may promote instability and place a question mark over the solidity of sound institutions. Hence many regulators' insistence on more stringent reporting requirements. The European Commission's Capital Adequacy Directive (CAD) insists that banks operating in Europe must be able to identify their position, counterparty and large exposure risks across the entire trading book on a global basis. This is used to determine the amount of capital which must be held to cover the exposures. On a day to day level, managers must be able to monitor the activities of their traders to ensure they are complying with the bank's regulations and limits. The regulatory and risk management requirements thus put a major burden on the IT department to ensure that all systems and implementations are compliant. In addition, the many developers involved in writing key applications, whether for trading, portfolio evaluation or risk management, have access to a range of development tools compatible with the Windows platform – both for easier development and to ensure new applications will be consistent with reporting requirements.

Focusing on the customer

For the private investor, the advantages of trading across the Internet are clear with reduced transaction costs and immediate access to account details and portfolio evaluations.

Customer service is just as important in this arena as in retail banking. Sell-side firms are competing all the time to be the first to offer brokerage services and research to the buy-side. In times of fast moving market conditions, it is vital for a fund manager to have immediate access to the research and analytical services offered by his/her broker. The advent of the Internet has been of great significance here, because it offers cheap, fast distribution and opens up new markets for these services. A recent report by the Centre for the Study of Financial Innovation, 'The Internet and Financial Services', notes that while the potential of the Internet as a vehicle for trading poses a threat to the underwriter and the broker, institutional trading of securities remains at present largely a phone-based business. The retail brokerage market however was one of the first industries to embrace the Internet as a medium for online transaction and new account generation. For the private investor, the advantages of trading across the Internet are clear with reduced transaction costs and immediate access to account details and portfolio evaluations.

Internet trading

The widespread adoption of Internet trading has been slow in the investment banking industry due to increased regulatory and security issues. However in the areas of distributing institutional research services and price offerings, its impact has been considerable.

Faster and more sophisticated means of accessing institutional research are key weapons in the fight for competitive edge.

At the same time, as the cost of maintaining a database has come down, more organisations are maintaining their own databases for research purposes. Securities firms have developed intranet-based institutional research systems, where all the research reports – company and macro-economic – are filed on to one global network to which all employees have access. This reduces distribution and development costs. In addition, it provides a platform to take these reports beyond the printed word – incorporating in-house financial modelling, historical charts, audio visual commentary, through to real-time and archived multimedia reports. Chat rooms have also emerged in the markets, operating on closed networks or intra/extranets, which participants use to swap market information. Some firms, are positioning themselves in alliance with information providers in preparation for a scenario in which information provision is de-bundled from broking.

An institution's use of the Internet for communicating with its clients needs to be product orientated so as to meet the demands of its varied customer base.

One example of potential use of the Internet is a subscription that provides web site access to information on international companies, as well as a link to the SEC's EDGAR filing system – all linked with a search engine thus allowing the user to profile the results in the way in which he or she requires. It is worth pointing out that an institution's use of the Internet for communicating with its clients needs to be product orientated so as to meet the demands of its varied customer base. A fixed income fund manager will have different customer requirements to those of his opposite number in equities.

The role of the database in supporting an international securities trading operation is crucial.

The role of the database in supporting an international securities trading operation is crucial. Traditionally the financial markets sector has been entrenched in alpha-numeric data handling, but more complex database requirements such as time-series and web data handling are now beginning to emerge. Trading systems are designed to handle lots of complex transactions very quickly, and it is absolutely critical that an institutions' database is also able to perform at this level.

Straight-through processing

A single point of entry for trade data from the trader's workstation has long been recognised as the ideal to which all modern dealing rooms aspire.

The trading environment is changing with the drive towards straight-through processing (STP), which is a means of capturing essential data about a transaction as close to initiation as possible so that all the trade and settlement processing can occur automatically. A single point of entry for trade data from the trader's workstation has long been recognised as the ideal to which all modern dealing rooms aspire; non-automated use of securities messages is costing the industry billions of dollars a year.

Not only is STP more efficient but it makes for a more transparent organisation. This in turn makes for easier compliance with tightening regulatory requirements. The transition has been made more difficult where there are a multiplicity of disparate systems to contend with.

This problem is highlighted when firms merge or are taken over by a larger organisation with conflicting IT infrastructures. Moving to the consistent and coherent architecture offered by the Microsoft Windows NT platform will help resolve these problems.

Security is needed to protect the market participant; reliability is essential to prevent the institution finding itself unable to trade and thereby losing clients.

Added to these newer concerns are those which are at the bedrock of any trading environment – a need for a very high level of security and reliability. Security is needed to protect the market participant; reliability is essential to prevent the institution finding itself unable to trade and thereby losing clients. Technology problems perceived in either of these areas are liable to result in significant loss of business – the opportunity cost.

A robust and integrated mailing system is essential in the global trading environment for facilitating communication and order confirmations.

In a global trading operation, traditional telephone and fax-based processes for the allocation and uptake of orders between different trading rooms around the world creates inefficiencies in trading across different time-zones, resulting in increased errors and poor execution of orders. By creating a workflow application, a firm can automate its way of handling orders and allocating these within a single operation across its trading rooms worldwide. Traders, controllers and administrators can all use such a system. When an order is received it is placed into an electronic folder by the controller. All order folders are held in a public file and can be viewed by the relevant staff. When a trader accepts an order he or she is responsible for that order from that moment onwards, although there is still the ability to cancel or reverse the order at this stage. Trade status is displayed and any order is locked when accessed. When the order is executed, or it is cancelled, reversed or it expires, then it is sent to a sub-folder to be archived. If this is the case, then the process will be automatic resulting in improved control and faster customer response. A robust and integrated mailing system is essential in the global trading environment for facilitating communication and order confirmations. Once implemented there is improved control, with responsibility for any order always being assigned to a specific staff member thus meeting any regulatory or compliance requirements.

Once again the innovative use of technology by financial institutions will provide them with the infrastructure that they require today while not holding them back in meeting the challenges posed by such a fast moving marketplace.

Applying Microsoftâ Windowsâ DNA to Retail Banking

Retail banks are faced with the challenge of building and integrating new delivery channels to meet the opportunities presented by the Internet and Internet technologies. At the same time, they must continue to support and enhance their existing delivery channels and transaction processing systems. Microsoft Windows DNA enables the creation of applications that take advantage of Internet technologies to service the new delivery channels whilst preserving existing investments and offering a low risk migration path to those Internet technologies.

Servicing the customer – delivery channel services

Financial institutions wish to service as many delivery channels as the business requires, but they also wish to minimise the development cost of maintaining multiple heterogeneous clients.

Financial institutions are faced with many conflicting demands when deciding how best to service the delivery channels. On the one hand they wish to service as many delivery channels as the business requires, but on the other they wish to minimise the development cost of maintaining multiple heterogeneous clients. For instance, they want to build a home banking application that can service the broadest possible range of clients. At the same time, they wish to leverage the skills of their developers so that training and experience can be reused across delivery channels. Financial institutions can meet these multiple requirements by taking advantage of the broad reach of the Microsoft Windows NT operating system family and the services provided by the Windows DNA architecture.

From the home, through to self service devices and into the branch office, there are devices based on the de facto PC standard to suit every requirement.

The Microsoft Windows operating system family with its consistent user interface and programming model allows developers to write applications which run without modification on the broadest range of possible hardware configurations. From the home, through to self service devices and into the branch office, there are devices based on the de facto PC standard to suit every requirement – all running one member of the Microsoft Windows operating system family.

Because developers can use a consistent programming interface and tool set across all members of the Windows family they can leverage their skills and experience.

Financial institutions can build user interfaces using basic HTML in order to reach the broadest range of clients – PC, Mac and Unix – running many different browsers. Financial institutions can build user interfaces using Dynamic HTML and scripting (Visual Basic Scripting Edition or JScript) providing the rich, flexible and interactive experience users have come to expect from Windows based applications. Because of the cross platform support provided by Microsoftâ Internet Explorer 4.0 (IE4) such user interfaces can still service a broad range of clients. Financial institutions can encapsulate business logic in scriptable components for deployment on the client or on the server depending on the client device, because COM and the scripting environment are supported at all layers of Windows DNA.

For instance, a home banking application may have a basic HTML user interface and a Dynamic HTML user interface; this will deliver services to all customers but offer a richer experience to those customers with more advanced browsers. Microsoft® Internet Information Server (IIS) and the Active Server Pages (ASP) scripting technology can be used to determine the type of browser the customer is using and deliver the appropriate user interface. The components that verify user input and generate financial services requests run either in IE4 on the client or as part of an ASP script on the server.

Developers can use the same tools and techniques for building all of the delivery channels applications, reducing training costs and increasing skills reuse.

The power and flexibility of Dynamic HTML combined with scripting and components, ensures that the user interface for business applications in the branch, the self service device, the call centre and the back office can be built using this same technology. Developers can reuse business logic and user interface components across delivery channels reducing the amount of new code they have to write. Developers can use the same tools and techniques for building all of the delivery channels applications, reducing training costs and increasing skills reuse. This reduces the cost of building new applications and the time to build the application. It also improves the quality of that application. The net result is decreased time to market.

For example, the same Dynamic HTML user interface component that gathers the details used to transfer funds from one account to another can also be used in a browser-based home banking application, in a branch banking teller application and in a self-service device. By using a common message protocol, such as OFX, to send financial services requests from the client to the server across the delivery channels, financial institutions can reuse the application components that generate those requests.

Re-usability of components across multiple hardware platforms

Many financial institutions prefer to follow a multiple hardware vendor policy for branch peripherals such as swipe card readers or passbook printers and self-service devices. Application components need to be insulated from changes to branch peripherals - it should not be necessary to re-engineer an application simply because a passbook printing device has been changed in a branch.

The Windows Open Services Architecture Extensions for Financial Services (WOSA/XFS) have been developed by the Banking Systems Vendor Council to address this problem. Financial applications are built to use the WOSA/XFS programming interfaces insulating them from specific hardware features. Financial institutions then simply install the "device driver" from the manufacturer to support a particular peripheral. This enables not only the reuse of components across multiple delivery channels but also across multiple hardware platforms.

This standard has now been handed over to the CEN/ISSS standards body and is now referred to as CEN XFS. The standard is now published as a CEN workshop agreement and has support from over 10 international banking peripheral vendors.

Customers want home banking applications that are tailored to reflect their particular financial needs and interests. Financial institutions can use the Microsoft® Site Server Personalisation Services to easily build these customisable user interfaces. By using advanced technologies such as NetMeeting, which allows video conferencing over the Internet and intranet, financial institutions can offer an even richer service to their customers. If a customer wants to apply for a loan but needs advice, they will be able to connect directly to the call centre from the home banking application to talk to a customer representative.

By using the same Internet-based technologies to build user interfaces for home banking and self-service devices, financial institutions can serve the customer using the same familiar user interface both at home and at the branch or in the supermarket. Not only will the customer be presented with a familiar user interface, but because services such as personalisation are available, the application can be tailored to reflect the customer's requirements and offer interactive advice. Such technologies ensure that financial institutions can provide a wider range of tailored services to customers while reducing the customer's need to visit the branch. This increases the customer's perception of the financial institution's responsiveness and flexibility and so increases customer satisfaction and loyalty. At the same time, providing these services across the most cost-effective delivery channels reduces operating margins.

Processing the business – business services and integrated storage

Financial institutions face similar dilemmas when building the business services that sit behind the delivery channels. They want to service as many delivery channels as the business requires but they do not wish to incur the overhead of maintaining multiple business server infrastructures. They want to build an application infrastructure that scales up to Internet banking and scales down to small branch banking. They want to produce applications that deliver a single view of the customer without having to re-engineer their existing account-based transaction processing systems. They want to take advantage of the price performance and choice advantages provided by PC-based servers, but they still want the scaleability and reliability that until now has only been provided by the high cost mainframe transaction processing systems. Financial institutions can meet these multiple requirements by taking advantage of the business services – Web Server, Transactions, Queuing, Messaging and Scripting – and integrated storage provided by the Windows DNA architecture.

Microsoftâ Windows NTâ Server and the Microsoft® BackOffice® family of products provide the bedrock on which the Windows DNA services are built. They offer integrated security and administration, fast file and print, communications, messaging and groupware, database, host connectivity, systems management, Internet, secure proxy, content creation and web site management, and information retrieval and search services.

Microsoft BackOffice server applications, with their familiar Windows-based interface, are easy to install, deploy, and administer.

The use of common administration tools across the BackOffice family helps financial institutions reduce training and support needs. Integrated security means that user and security permissions need to be defined once rather than for each service, reducing administration overheads and the possibility of errors.

A single Windows NT Server running Microsoftâ SQL Serverä, with realistic support for up to 10 processor SMP systems, offers scaleability beyond the requirements of all but the most demanding applications at lower and lower cost. However, it is important to be able to scale down as well as up – from the smallest branch office to a home-banking Internet site. Windows NT Server and the Windows DNA services running on top of it are available across an enormous range of hardware platforms – from the single processor tower with 32MB of memory and 1GB of storage, through to the enterprise level 8 processor rack systems with gigabytes of memory and terabytes of storage. All installations will have the same reliability and scaleability services built in. As a consequence, financial institutions can build a single set of business services that can service all the delivery channels from the branch office through to the Internet. Equally, banking application vendors can build a single solution and offer it to all sizes of institution. This scaleability and reliability is further enhanced by high availability – Microsoft® Cluster Server makes high availability a realistic option for all institutions.

Microsoft® Transaction Server (MTS), provides financial institutions with the services required to more easily deliver manageable, reliable, scaleable COM-based applications that will service thousands of simultaneous users.

Microsoft® Transaction Server (MTS), now built into Windows NT Server, provides financial institutions with the services required to more easily deliver manageable, reliable, scaleable COM-based applications that will service thousands of simultaneous users. MTS manages transaction scope across components, across databases, across machines and even across heterogeneous systems (Windows NT, Unix, CICS). MTS is integrated with Microsoft® Message Queue Server (MSMQ). MSMQ is a store-and-forward middleware that provides assured delivery of messages between applications running on multiple machines across a network. Distributed transactions, MSMQ and data replication from host database systems into Microsoft SQL Server, together with low administration overheads allow financial institutions to distribute data to where it adds the greatest value for the customer – for instance a local branch office. MTS enables developers to build scaleable distributed solutions that integrate SQL Server, the Internet and legacy systems via standard COM interfaces. Developers no longer need to build complex infrastructures or understand arcane programming tools. They can focus on building business solutions, lowering development costs by as much as 40%.

Using the distributed services of Windows DNA, financial institutions can build flexible applications based on components that can be used across multiple delivery channels.

Using the distributed services of Windows DNA, developers can build applications as a set of co-operating components. As a result, financial institutions can build flexible applications based on components that can be used across multiple delivery channels. In the past, a home banking application and a branch banking teller application would have contained separate but almost identical business logic to transfer funds between accounts.

Because this business logic was embedded in the separate applications, there was little or no chance to reuse it across the applications and a great chance that common business rules were implemented inconsistently. Now the business logic is encapsulated in a single 'financial transaction' component that services both delivery channels, and so only needs to be implemented once. This ensures consistent implementation, higher quality and lower maintenance costs. Because developers can use the same standard tools and techniques for building components for all delivery channel applications, training costs are reduced and skills are reused. This reduces the cost of building a new delivery channel application, slashes development timeframes, and improves quality control.

The COM-based component approach blurs the margins between in-house development and packaged software.

The COM-based component approach blurs the margins between in-house development and packaged software. In the past, packaged applications could save development time but were either hard to integrate with existing systems and difficult to extend, or complicated to set up and deploy. By building their applications to the Windows DNA architecture and delivering them as a set of components, banking application vendors solve this problem for financial institutions. With MTS taking care of transaction co-ordination and component isolation issues, financial institutions can integrate these component-based solutions into their delivery channel infrastructure, and then make use of the these components to build new services.

Financial transaction components can be invoked via the Internet, the Intranet and the LAN. Microsoft Internet Information Server (IIS) and the Active Server Pages (ASP) scripting technology allow financial transaction components to be invoked from web pages or via OFX requests received from personal financial managers, small business accounting packages and browser based home banking applications. The same components may be invoked directly from a branch banking teller application using Microsoft DCOM technology. This flexibility gives financial institutions the opportunity to reuse financial transaction components across multiple delivery channels – whether they be in the home, the branch, or at the self-service device.

Building new delivery channels is about serving the customer in a more responsive and cost effective manner. This can only be achieved if the new applications present a unified view of customer information and associated relationship information.

Building new delivery channels is about serving the customer in a more responsive and cost effective manner. This can only be achieved if the new applications present a unified view of customer information and associated relationship information. This unified view of the customer must transcend system boundaries no matter whether the information lies in a SQL Server database, a legacy transaction processing system, an email system or even a letter written with a word processor.

Microsoft and its partners provide many tools and strategies for preserving existing investments by integrating application transactions, message queuing infrastructure and datastores into Windows DNA applications.

These tools include CICS, IMS and XA Support via COM interfaces in Microsoft Transaction Server and the Component Transaction Integrator (COMTI), Microsoft Message Queue Server and DCOM support on non-Microsoft platforms.

Microsoft's Universal Data Access (UDA) Technology known as OLE DB, allows access to disparate data sources.

Microsoft's Universal Data Access (UDA) Technology known as OLE DB, allows access to disparate data sources through a consistent COM interface. OLE DB was designed to build on the success of ODBC by exposing all data sources, not just relational databases, through a common set of COM interfaces.

Under this architecture, Active Data Object (ADO) is the high-level interface, built on-top of OLE DB, that most applications developers will use from development environments such as Microsoftâ Visual Basicâ, Microsoftâ Visual C++â, Microsoftâ Visual J++ä, Active Server Pages (ASP) and many others.

Data from email, files, spreadsheets, and documents, as well as databases, is accessible through OLE DB. This allows developers to access from many sources without the overhead of using multiple proprietary data access APIs.

Using these technologies, financial institutions can build components that gather information from many systems. This allows them to build delivery channel services which present a single view of the customer. The analysis tools built into Microsoftâ Site Server may be used to evaluate where customers go on a web site, how often they go there and how long they spend there. Combining this data with other customer information held by financial institutions renders a uniquely powerful view of the customer for targeted sales and marketing purposes.

Other important aspects of ensuring responsive customer services are communication, collaboration and the automation of cross departmental tasks.

Other important aspects of ensuring responsive customer services are communication, collaboration and the automation of cross departmental tasks. In a geographically distributed enterprise such as a retail bank with many branches, a reliable, scaleable, easy to manage messaging backbone such as Microsoft® Exchange Server is vital to ensuring effective communication. Microsoft Exchange offers comprehensive mail services and tight integration with Microsoft® Office so that users may send reports, presentations and spreadsheets to each other simply and easily.

Integration with the rest of the Microsoft BackOffice family of applications together with event-triggered automation and server side scripting make it easy to build applications that route tasks to the appropriate person and link into the business processes running as components in MTS.

For instance, the application for a loan that needs to be sent from the branch office to head office for approval can now be fully automated and tied into a financial institution's accounting applications.

The net result is faster time to market, satisfied customers and lower delivery costs.

By taking advantage of the business process services and integrated storage model provided by the Windows DNA architecture, financial institutions can build flexible component-based applications that integrate existing systems to present a single view of the customer. These new applications can be quickly extended and altered to meet new business requirements and to reach out to new delivery channels. Developers use the same standard tools and techniques for building applications across the delivery channels. This lowers training costs and increases skills reuse. This in turn reduces the time and cost to build new delivery channels, applications and increases the quality of those applications. The net result is faster time to market, satisfied customers and lower delivery costs.

Applying Windows DNA to the Financial Markets.

Integrated financial information services are essential to the operation of any financial markets trading operation. The efficient distribution of real time market data, news, historical data, market analysis and financial modelling tools are essential.

The automation of business processes are a key factor.

The automation of business processes are a key factor. Paper-based trading processes prevent the streamlining of the trading cycle and increase the numbers of trade errors. Automated execution, notification and settlement of trades increases the ability to trade more rapidly and reduces the opportunity for errors. The earlier trades are captured in the trading cycle, the more effective risk management systems will be.

Increasingly, financial institutions are operating on a global basis and require a global information view. Such operations must be supported by a global messaging infrastructure that facilitates internal communication.

Financial institutions must be able to build and buy flexible applications that can be extended rapidly and reliably to meet new requirements as soon as they appear.

Within this marketplace, new products and regulations are appearing with ever increasing frequency. Financial institutions must be able to build and buy flexible applications that can be extended rapidly and reliably to meet new requirements as soon as they appear. Component-based solutions together with broad tool support fulfils the promise of rapid application development.

Pre-trade – delivering integrated information services

Financial information is vital to the operation of the markets. Buy side and sell side are constantly striving for ways to get ahead of the market trends and to add value to their customers by delivering more and more sophisticated information services.

By migrating their private information delivery network infrastructures to the standard Internet communication protocols, financial information suppliers can use the same infrastructure to deliver real-time information, news and analysis across both the public and private networks.

Traditionally, the suppliers of financial information – the information feed vendors and the research providers – have either used private proprietary networks or paper as the means of delivering information. They have found that proprietary networks are expensive to maintain and hard to integrate with other services, and that paper based products are expensive to produce and can easily be ignored. The Internet and the standard communication protocols popularised by the Internet – TCP/IP, HTTP, HTML – offer massive opportunities to cut infrastructure costs and to deliver information to a wider audience than ever before. However, information suppliers must be able to shield their valuable assets from those who are not willing to pay for it. Also, while the Internet presents an opportunity for market analysis documents to be distributed more quickly and efficiently, it is not reliable enough for the delivery of real-time market information.

By migrating their private information delivery network infrastructures to the standard Internet communication protocols, financial information suppliers can use the same infrastructure to deliver real-time information, news and analysis across both the public and private networks. This then facilitates the creation of a single set of applications that take advantage of the Windows DNA services to deliver information across the Internet, the intranet and the extranet as well as over private real-time data networks. A common network infrastructure leads to decreased administration costs and reuse of administration skills which lowers training costs. Because all applications now use a common set of services, developers can use the same tools and techniques for building all of the information delivery applications. This reduces the cost of building new applications, the time to build the applications and increases the quality of those applications.

The information vendor has minimised the cost of supporting multiple information delivery channels, while still offering added value to the customer.

Because these information applications use standard protocols, customers will find it easier to integrate them into their existing infrastructures and applications and easier to extend them to build new information services. For instance, traders require real-time access to market data, whereas research departments are happy with delayed access to market data. The same data feed application can be used to supply both the trader and the research department, but the trader will have access over the private real-time network and the researcher will have access over the corporate intranet. The information vendor has minimised the cost of supporting multiple information delivery channels, while still offering added value to the customer.

Microsoft Windows NT Server and Internet Information Server (IIS) offer excellent security services.

Microsoft Windows NT Server and Internet Information Server (IIS) offer excellent security services including secure and flexible user authentication services. For instance IIS 4.0 includes the ability to map public key certificates to Windows NT user accounts. This could be used to give valued customers access to research reports on an institution's intranet or combined with the services in Microsoft Site Server to restrict access to those parts of a web site for which a customer has paid. Microsoft® Certificate Server provides the means for institutions to issue their own certificates to customers.

Institutions have the flexibility to offer graded access to their research products allowing them to reach a wider audience while protecting their information assets and offering real value to important customers.

By taking advantage of these services, institutions can use the Internet as a low cost and prompt delivery mechanism for research products. Institutions have the flexibility to offer graded access to their research products allowing them to reach a wider audience while protecting their information assets and offering real value to important customers. By publishing the research products using Internet technologies, institutions can use both the intranet and the Internet as delivery mechanisms. In this way, the same tools and techniques may be used to publish information internally and externally. This lowers training costs and increases skills reuse, which reduces the time and cost to produce new products. The result is quicker time to market and satisfied customers.

Institutions can start to use the more sophisticated information delivery opportunities presented by the Internet and intranet.

Having moved to publish market research on their intranet and on the Internet, institutions can start to use the more sophisticated information delivery opportunities presented by this environment. At the simplest level the integration of the web and Microsoft Office allows documents to be written in a familiar environment and then published straight to the web. Documents can now begin to take advantage of advanced web technologies. On the client, Dynamic HTML and scripting can be used to make documents more interactive. Information can be published directly to the customer's desktop using Internet Explorer 4.0 (IE4). On the server, Microsoft Internet Information Server (IIS) and the Active Server Pages (ASP) scripting technology combined with Microsoft SQL Server build flexible information services that combine news, historical data retrieved from the database and analysis prepared by research departments. Rather than transcribing an analysts meeting into a document for customers to read, the meeting can be captured on video and delivered to customer desktops via NetShow video streaming technology. When a news story breaks, analysts' comments can be recorded and immediately delivered to customers via the same technology. Institutions can use the Microsoft Site Server Personalisation service to build user interfaces that lets users – both internal and external – to tailor the information presented to their particular needs and interests. The analysis tools built into Microsoft Site Server allow analysis of where customers go on a web site, how often they go there and how long they spend there. This information can be used to tailor information services to better suit the needs of customers, or to cross-sell related products.

Information services must be integrated into customer applications.

For the information services to be of real value, it must be possible for customers to exploit them in the most effective way. This can only be achieved if the information services can be integrated into customer applications. Information services that are exposed as COM components give customers the maximum flexibility. COM components can be integrated into server side information gathering applications, into client side information display applications as ActiveX Controls, and into the open environment of the Active Desktop. Microsoft® Excel enables the tracking and modelling of real-time data feeds either through Excel add-ins or ActiveX controls provided by the data feed vendors or by third parties.

Because Excel can handle high throughput connections, fund managers and traders can graph and model financial data in real time without having to resort to less flexible custom applications. With the advent of the Active Desktop in IE4, web pages and ActiveX controls can be embedded directly into the desktop allowing users to customise their own workstation. For instance, an HTML based news feed and an ActiveX stock ticker can both be embedded into the Windows NT desktop giving traders instant and continuous access to this information.

The common services provided by the Windows DNA architecture allow these components to be used either on the client or on the server in applications.

Data feeds and financial models that are exposed as COM components can be integrated easily into custom applications. The common services provided by the Windows DNA architecture allow these components to be used either on the client or on the server in applications developed in Visual Basic, Visual C++, Visual J++ or any one of the many application development environments that support COM. For example, a data feed component can be embedded in an Excel spreadsheet to provide the data for a real-time graph, or used in a financial modelling application written in Visual Basic. The same component can also be used in a server application that captures stock highs and lows and stores this information as time series data in a Microsoft SQL Server database for later review and analysis.

To be effective, traders must have instant access to all the information pertaining to a particular customer.

To be effective, traders must have instant access to all the information pertaining to a particular customer, no matter whether the information lies in a SQL Server database, a legacy transaction processing system, an email system or even a letter written with a word processor. Microsoft and its partners provide many tools and strategies for preserving existing investments by integrating application transactions, message queuing infrastructure and datastores into Windows DNA applications. These tools include CICS, IMS and XA Support via COM interfaces in Microsoft Transaction Server and the Component Transaction Integrator (COMTI), Microsoft Message Queue Server and DCOM support on non-Microsoft platforms. Microsoft's Universal Data Access (UDA) Technology, known as OLE DB, facilitates access to disparate data sources through a consistent COM interface. OLE DB was designed to build on the success of ODBC by allowing all data sources, not just relational databases, to expose their data through a common set of COM interfaces.

Under this architecture, Active Data Object (ADO) is the high-level interface, built on top of OLE DB, that most applications developers will use from development environments such as Visual Basic, Visual C++, Visual J++, Active Server Pages (ASP) and many others.

Data from email, files, spreadsheets, and documents, as well as databases, is accessible through OLE DB. Developers may access from many sources without the overhead of using multiple proprietary data access APIs. By taking advantage of these technologies, institutions can build components that gather information from many systems. This information can then be used by client profiling applications to present a single view of the customer.

Technology that aids cross-enterprise collaboration is vital.

In a world of global trading operations, technology that aids cross-enterprise collaboration is vital. The key to collaboration is a reliable, scaleable, easy to manage enterprise wide messaging backbone such as Microsoft Exchange Server. Exchange offers tight integration with Microsoft Office allowing users to send reports, presentations and spreadsheets to each other simply and easily. Public folders make it easy to share and search for documents and to set up discussion groups. Integration with the Internet and the other parts of Microsoft BackOffice together with event-triggered automation and server side scripting make it easy to build more sophisticated collaboration applications that, for instance, aid in the production of research products or sales force automation.

Execution and settlement – automating trading in a global environment

The securities industry is in agreement that automation of trading operations would save the financial industry billions of dollars a year.

The securities industry is in agreement that automation of trading operations would save the financial industry billions of dollars a year. From the trader's workstation through to notification of settlement, automation would remove errors, decrease settlement delays, increase the availability of data to risk management processes and introduce a single method of notification of trade. However, a mass of disparate systems, messaging protocols and the requirement for flexible applications has made this a complex problem. What is required is a reliable and scaleable infrastructure from which to hang flexible applications. The infrastructure should integrate the existing systems without the development cost – time and money – normally associated with building a distributed computing architecture.

Windows DNA architecture offers institutions the solution to this problem. This can only happen when all trades are recorded electronically as they happen, whether they take place on the trading floor of an open outcry exchange or at the desk of an FX trader surrounded by screens. The Microsoft Windows operating system family, from Microsoft® Windows® CE through to Windows NT Server Enterprise, and its consistent user interface and programming model offer institutions the flexibility to deploy trading applications to all sectors of the market. The trader on the floor of an open outcry exchange can use a handheld PC running Windows CE connected by a radio modem to accept and record trades. The FX trader can use a workstation running Windows NT to graph data in Microsoft Excel in real time and to run the trading application.

The common Windows architecture offers choice and flexibility while allowing institutions to maximise the investment they have made in applications, development skills, help desk systems, technical expertise, and end users knowledge of the Windows operating system.

Windows NT Server and SQL Server with their proven scaleability and reliability provide a robust base for the Windows DNA services.

Behind these deal capture user interfaces it is vital to have an infrastructure that is scaleable and reliable. Windows NT Server and SQL Server with their proven scaleability and reliability provide a robust base for the Windows DNA services. With realistic support for up to 10 processor SMP systems, a single Windows NT Server running SQL Server offers scaleability beyond the requirements of all but the most demanding applications at lower and lower cost. It is important to be able to scale down as well as up – global trading operations mean that institutions need solutions that can address both large and small trading rooms. Windows NT Server and the Windows DNA services running on top of it are available across an enormous range of hardware platforms – from the single processor tower with 32MB of memory and 1GB of storage through to the enterprise level 8 processor rack systems with gigabytes of memory and terabytes of storage. All installations will have the same reliability and scaleability services built in. Banking application vendors can build a single solution and offer it to all trading rooms, from the five person local office to the 1000 person trading floor. Institutions can build a single solution which can be deployed to both an agency office in Bahrain and the head office in Frankfurt, furthering the automation of global operations. This scaleability and reliability is further enhanced by high availability. In the past, high availability was only on offer to those who could afford high cost proprietary solutions. The release of Microsoft Cluster Server makes high availability a commodity solution available to all trading floors, large and small.

In a global trading environment applications must be reliable across unreliable networks.

It is not enough simply to have reliable and scaleable hardware, the applications that run on that hardware must be designed for reliability and scaleability too. Microsoft Transaction Server (MTS), now built into Windows NT Server, provides institutions with the services required to more easily deliver manageable, reliable, scaleable COM component-based applications which will service thousands of simultaneous users. MTS allows institutions to build reliable solutions by offering a programming model that uses transactions to achieve atomic updates and consistency across components, across databases, across machines and even across heterogeneous systems. MTS allows institutions to build scaleable applications by providing all the required services – intelligent activation of server components, thread pooling, database connection pooling, component isolation, component management, component deployment and so on. MTS allows developers to focus on building business solutions, lowering development costs by as much as 40%.

In a global trading environment applications must be reliable across unreliable networks. Microsoft Message Queue Server (MSMQ) is store-and-forward middleware that provides assured delivery of messages between applications running on multiple machines across a network. MSMQ provides a COM interface for easy programming access. Queues can be included in MTS transactions to facilitate managed updates to local and remote systems. MSMQ is an ideal environment for building large-scale distributed applications, such as global trading operations which encompass mobile systems or communicate across unreliable networks.

The accepted solution to building flexible high quality systems is components.

If applications cannot be developed, deployed and altered rapidly to meet new business requirements, then scaleability and reliability become irrelevant. It is no good building a system to deal with current instruments, but forces the return to a paper-based system as soon as a new instrument is introduced or the institution enters a new market. Equally, it is no good to be able to alter a system quickly if this introduces quality problems. The accepted solution to building flexible high quality systems is components. COM and MTS provide the infrastructure for building reliable and scaleable component-based solutions which span both the client and the server. COM components hide their implementation from other parts of a system, thereby increasing flexibility and decreasing problems related to change. Different COM components with different hidden implementations can have the same standard COM interface allowing the same application to work with multiple components and new COM components to be added to an application with no change. For instance, by encapsulating the implementation of the business rules for a particular financial instrument behind a standard COM interface, institutions can build applications that can deal with multiple instrument types without requiring them to understand the details of those instruments and so protecting them from changes to those instruments. COM components and interfaces allow banking application vendors to offer their solutions as a set of components that can be easily extended to meet the unique business requirements of a particular institution and integrated into new applications.

A risk management application may include a particular yield curve component. Institutions can reuse this component anywhere that their applications require a yield curve calculation. If the yield curve calculation does not take into account a factor only present for that institution, the institution can replace it with their own component, tailoring the application to their particular needs. Because COM provides version safety, the component will continue to function correctly if the application is upgraded.

Tool support – for analysis, implementation and team programming – is crucial to the rapid development of new applications.

Tool support – for analysis, implementation and team programming – is crucial to the rapid development of new applications. Because COM is such a widely accepted standard there are many development tools and programming environments that support the creation of COM components, including Visual Basic, Visual C++, Visual J++ and more recently DHTML and XML scriptlets. Additionally because Windows DNA supports common services across the client and the server, the same tools and techniques can be used to develop in both environments decreasing training costs and increasing skill reuse.

A major challenge for any institution attempting to implement trade automation is the integration of existing systems. Equally, risk management systems must be able to gather data from multiple sources. Existing transaction processing systems can be integrated into Windows DNA applications via COM interfaces in MTS, via MSMQ gateways or using one of the many third party solutions that integrate with SNA Server and SQL Server. Universal data access via OLE DB gives access to disparate datastores – database, email, files, spreadsheets, documents – through a standard COM interface. Other strategies include replication into SQL Server from other sources such as host databases, facilitating local caching of often accessed data and DCOM support on non-Microsoft platforms.

The ability to send and receive these messages from a single environment that is integrated with email, voicemail and office applications offers many productivity advantages.

Financial transactions all generate an enormous number of messages – Financial EDI, SWIFT, telex, fax. The ability to send and receive these messages from a single environment that is integrated with email, voicemail and office applications offers many productivity advantages. Microsoft Exchange and the many third party solutions which support the integration of different message types into the Microsoft Exchange environment, allow institutions to build workflow applications to create, authorise and transmit all types of messages for delivery into a single integrated in-box on the user's desk. Equally, Microsoft Exchange can be used for automating order processing. As orders are received from customers they can be placed into a Microsoft Exchange public folder available to all authorised traders. Traders can then accept orders and execute them. Server side events and scripts can be used to register trades with the back end processing systems. Because Microsoft Exchange can be deployed on a global basis, these systems can be used to make global trading more efficient. For instance, a trader in New York can accept and execute an order placed in London after the London markets have closed.

By taking advantage of the services provided by the Windows DNA architecture and the reliability and scaleability of Windows NT Server and SQL Server, institutions can build integrated dealing and settlement systems for automation of the entire trading cycle. By building risk management systems on this same infrastructure institutions will be able to move risk management forward from the back office into the front office.

Core technologies

Enables businesses to more easily build new systems that take advantage of current technological capabilities.

Microsoft Windows DNA

Microsoft has created a framework called Windows Distributed interNet Applications Architecture (DNA) which enables businesses to more easily build new systems that take advantage of the capabilities of the personal computer and the opportunities presented by the Internet while integrating with existing systems.

Windows DNA integrates the personal computer standard, the Internet and legacy infrastructures by enabling computers to interoperate and cooperate equally well across both corporate and public networks. Windows DNA provides an interoperability framework based on open protocols and published interfaces that allows customers to extend existing systems with new functionality. This same open model provides extensibility 'hooks', so third parties can realise new business opportunities by creating compatible products that extend the architecture.

Windows DNA applications use a standard set of Windows-based services that address the requirements of all tiers of modern distributed applications – user interface and navigation, business processes, and data storage. The heart of Windows DNA is the integration of the Internet and client/server application development models through a common object model – the Microsoft Component Object Model (COM). Windows DNA provides a common set of services that are exposed in a unified way at all tiers of a distributed application.

Windows DNA fully embraces an open approach to distributed computing, building on standards approved by bodies such as the World Wide web Consortium (W3C) and the Internet Engineering Task Force (IETF).

By taking advantage of the capabilities in Windows DNA, developers can build entirely new categories of applications.

By taking advantage of the capabilities in Windows DNA, developers can build entirely new categories of applications, including electronic commerce and other interpersonal and intercorporate communication applications. Because they are using standard implementations of networked services and modern, component-based development methods, developers can deliver these innovative applications much faster and more cost effectively than previously.

Traditionally financial institutions have built separate IT systems and infrastructures to service the different business opportunities and requirements as and when demand arose.

In this environment, a financial institution must maintain and administer a number of different client platforms – ranging from a simple 3270 based terminals through to an integrated PC environment. Typically these platforms are so different there is little opportunity to share user, administration or development skills across them.

If business process analysis shows that certain applications should be deployed at a particular point of contact, it is not possible to do so because each of these platforms is targeted to one particular task. For instance an application that integrates Microsoft Excel cannot be used from a dumb terminal at a teller position. These issues lead to increased operations, development and training costs and an inability to adapt quickly to changing business requirements.

Microsoft Windows operating system family

The Microsoft Windows operating system family allows financial institutions to choose the most appropriate hardware platform for the task to be performed.

The Microsoft Windows operating system family – Microsoft® Windows® CE, Windows-based Terminals, Microsoft® Windows® 95 / Windows® 98 and Windows NT / Windows® 2000 – allows financial institutions to choose the most appropriate hardware platform for the task to be performed. Handheld PCs and portables can be used to support mobile users. Windows-based Terminals, where applications and data reside completely on the server, can be used in task-oriented environments, where manageability and cost of ownership are paramount. NetPCs offer reduced cost and complexity while maintaining the choice and flexibility associated with PCs. High-end workstations offer advanced levels of functionality and flexibility. This highly scaleable and manageable family of solutions, with a common Windows architecture, allows financial institutions to maximise the investment they have made in applications, development skills, help desk systems, technical expertise, and end user knowledge of the Windows operating system.

Windows CE has proven itself capable of handling the most demanding 32-bit embedded applications and brings the full power of the Microsoft 32-bit Windows-based development tools to the embedded systems designer.

Microsoft Windows CE is a compact, highly efficient and scaleable operating system that is being used in a wide variety of embedded products, from hand-held PCs to specialised industrial controllers and consumer electronic devices. Windows CE has proven itself capable of handling the most demanding 32-bit embedded applications. Equally important, Windows CE brings the full power of the Microsoft 32-bit Windows-based development tools to the embedded systems designer.

One of the primary reasons to choose Windows CE for embedded applications is the widely used Microsoft® Win32® (application programming interface (API). The Win32 API is at the core of nearly every 32-bit application being written for Windows today, from high-end server products running on the Microsoft Windows NT operating system to the smallest desktop and embedded applications. Using this technology developers can now create applications which will support mobile users with the same level of application richness found on other hardware platforms.

Within the Windows DNA architecture all financial services clients are connected to the Windows NT Server via standard IP based protocols. This lowers infrastructure costs, decreases systems administration costs and increases reuse of administration skills, thus lowering training costs.

By rationalising the core messaging protocols used across financial services clients, financial institutions can benefit from the economies of scale by deploying one set of application components to support these core messaging protocols. These components can be reused across the financial services clients. Because of its seamless support for many network protocols, Windows NT Server acts as a gateway to existing systems and the corporate network. This allows financial institutions to preserve existing network investments and migrate to the new standard networking protocols in an evolutionary manner.

Microsoft and its partners provide many strategies for preserving existing investments in transaction processing systems.

Microsoft and its partners provide many strategies for preserving existing investments in transaction processing systems – MVS, AS/400, Unix – by integrating them into Windows NT Server-based applications. These include CICS and XA support in Microsoft Transaction Server, Microsoft Message Queue Server, OLE DB, Data Transformation Services (DTS), simplifying the process of importing and transforming data from multiple, heterogeneous sources, into Microsoft SQL Server, and DCOM support on non-Microsoft platforms.

The ability to integrate with existing systems together with its support for new technologies such as the Internet and intranet and a wide range of high productivity development tools, makes Windows NT a powerful application development platform. Developers can produce new applications which tie together existing systems and extend the reach of those systems more quickly and easily than ever before.

Component-based architecture

Microsoft's Component Object Model (COM) is the backbone.

In the Windows DNA architecture, applications are built as a series of components. Microsoft's Component Object Model (COM) is the backbone used to knit these components together. The Microsoft Component Object Model (COM) is an accepted standard, and the multitude of programming languages which support this model allow developers to create applications in the environment with which they are most familiar.

Building applications based on COM components has many advantages for financial institutions. They can build flexible applications that can be quickly extended and altered to meet new business requirements. They can reuse business components they built themselves across applications. They can take advantage of the many pre-built components available from third party suppliers. They can tailor one of the many 'off-the-shelf' applications which support COM interfaces to rapidly build new solutions that meet their particular business requirements. They can integrate existing systems through COM: host- or UNIX-based applications are exposed to the developer in a consistent way through the COM interfaces.

COM+: enabling the future of Windows DNA

One of the keys to Windows DNA is a rich set of integrated services which make it relatively easy for developers to create and use software components and applications.

One of the keys to Windows DNA is a rich set of integrated services which make it relatively easy for developers to create and use software components and applications. Today, those system services are provided through COM, the Component Object Model. In the future, a richer set of services in COM+ will make it even easier for developers to create more innovative applications.

COM+ preserves the investments of code and skills that developers have made in COM. Applications that exploit today's COM services will work in the COM+ environment, and COM+ will make it even easier to build and reuse components. COM+ puts more of the infrastructure needed to write applications in the system, so that developers do not have to write the infrastructure themselves. They will be able to concentrate on writing the logic to solve their problems, rather than writing code to leverage object technology.

Today, a COM developer spends a significant amount of time writing code which has little to do with the actual value-added functionality of the component under construction. Ideally, developers should spend less effort building the foundation of the component, and more on the implementation of the business rules. Fortunately, much of the code for implementing these fundamental capabilities is nearly identical for all components. COM+ makes development much easier by providing a default implementation of these capabilities for the most common scenarios. If the run-time implementation doesn't suit developers' needs, developers can customise the foundation by using their own implementations. Although tools such as Microsoft® Visual Basic® currently handle these issues automatically for developers, the system-supplied COM+ extensions will provide a standard implementation regardless of the language chosen for development.

COM+ also defines a simpler, more robust model for registering, installing and versioning components. This makes it is easier to use and administer COM technology.

Turning data into information – data warehousing support

The data warehouse is an integrated store of information collected from other systems, and becomes the foundation for decision support and data analysis.

Making better business decisions quickly is the key to succeeding in today's competitive financial marketplace. Understandably, financial institutions seeking to improve their decision-making can be overwhelmed by the sheer volume and complexity of data available from their varied operational and production systems. Making this data available to a wide audience of business users is one of the most significant challenges for today's information technology professionals. In response, many financial institutions choose to build a data warehouse to unlock the information in their operational systems and understand real-world business problems.

The data warehouse is an integrated store of information collected from other systems, and becomes the foundation for decision support and data analysis.

The data warehousing process is inherently complex, and as a result has been historically costly and time-consuming. Microsoft has worked with the industry to create a platform for data warehousing, consisting of both component technology and leading products, which can be used to lower the costs and improve the effectiveness of data warehouse creation, administration and usage.

Microsoft has established a comprehensive approach to the entire process of data warehousing. The goal is to make it easier to build and design cost-effective data warehousing solutions, with technologies, services, and vendor alliances.

The Microsoft Alliance for Data Warehousing is a coalition that brings together the industry's leaders in data warehousing and applications.

The Microsoft Alliance for Data Warehousing is a coalition that brings together the industry's leaders in data warehousing and applications. The Microsoft Data Warehousing Framework is a set of programming interfaces designed to simplify the integration and management of data warehousing solutions.

Product innovations in SQL Server 7.0 improve the data warehousing process, with:

· OLAP Services – an essential component for enterprise solutions that require online analytical processing (OLAP), from corporate reporting and analysis to data modelling and decision support;

· Data Transformation Services for importing, exporting, and transforming data;

· improved handling of complex queries and very large databases;

· the Microsoft Repository, a common infrastructure for sharing information;

· visual design tools for creating and maintaining database diagrams;

· integrated replication, including multi-site update, for maintaining dependent data marts;

· integration of third-party solutions.

In conjunction with the Data Warehousing Framework, Microsoft is delivering a platform for data warehousing which reduces the costs, simplifies the complexity, and improves the effectiveness of data warehousing efforts.

Through the technologies underlying the Microsoft® Data Warehousing Framework and the features in Microsoft SQL Server 7.0, Microsoft is working to reduce the complexity, improve the integration, and lower the costs associated with data warehousing.

Customers investing in data warehouse technology based on the Microsoft platform can be assured that they are creating applications with the best possible economic considerations, while maintaining full scaleability and reliability of their systems.

The use of datawarehousing technologies bring benefits to applications harnessing this technology.

The use of datawarehousing technologies bring benefits to applications harnessing this technology. For example, an increase in the return on investment in marketing and advertising can be achieved through one-to-one targeting of services and product groups at particular customer segments. Powerful data interrogation tools highlight business opportunities in unexpected areas or uncover previously unconsidered product groups.

Security

Windows NT Server offers a secure, robust and scaleable platform for demanding, commercial use.

Windows NT Server offers a secure, robust and scaleable platform for demanding, commercial use. Comprehensive and usable security was a major design goal of Windows NT Server – ensuring that security is integrated and comprehensive. It is the only server operating system that provides U.S. Government C2-level security at the desktop and server. The UK Information Technology Security Evaluation and Certification (ITSEC) has given it an FC2/E3 rating.

Above and beyond this, Windows NT Server is highly scaleable so that even very large companies can have a manageable total number of servers, reducing security management costs, and making a security audit easier. It comes with a wide variety of standard features for security, which are well documented. It provides comprehensive tools to make it easy for financial institutions to manage and maintain their security. Financial institutions can manage user accounts and access rights from a central location. They can select settings from a wide range of user and system parameters, and graphical tools make managing security easier. For example, it is easy to set up a system so that it forces users to employ strong passwords and to force passwords to be changed with a defined frequency.

The integrated Microsoft approach provides a reliable and cost-effective platform.

Today's mission critical applications in financial services integrate relational databases, messaging, and access to legacy systems. The integrated Microsoft approach provides a reliable and cost-effective platform for these applications, along with the benefits of a single network login, unified account management, and common event and service management. The Microsoft BackOffice family of products can help financial institutions save money by providing a single source of comprehensive system services for integrating distributed systems.

High volume, reliable processing power

Within the financial services arena, it is not only necessary to provide systems that can process high volumes of transactions, but also to provide systems which will ensure uninterrupted processing, since the opportunity cost of system downtime is unlimited.

The technology necessary to achieve genuine, load-balancing, symmetric multiprocessing is intrinsic to all components of Windows NT Server.

Microsoft has invested considerable time and expertise in symmetric multiprocessing (SMP) technology for Windows NT Server, allowing it to run on machines with up to 32 processors, meeting the transactional demands of the industry. The technology necessary to achieve genuine, load-balancing, symmetric multiprocessing is intrinsic to all components of Windows NT Server.

Financial institutions spend millions of dollars designing disaster recovery plans. Clustering technology provides maximum uptime and the industry standard hardware to add processing power as needed. With Windows NT Server clustering, database servers, transaction processing monitors, and applications will all be able to use the cluster API to fully utilise the capabilities of the Windows NT Server cluster.

The integrated security approach makes systems more secure because there are fewer points at which security access is defined, hence reducing the number of potential attack points.

In order to meet the strict security requirements demanded by financial institutions, security considerations were integral to the design of Windows NT from the kernel level up, thus providing an integrated system not only for the Windows NT operating system itself, but also for add-on products such as BackOffice. The integrated security approach makes systems more secure because there are fewer points at which security access is defined, hence reducing the number of potential attack points. For explicit security requirements within the banking marketplace, Microsoft offers products which address these needs. For example, support for security features such as message encryption, digital certificates, or the requirements of firewall systems. Application and utility products for data centre operations, as well as security-related supplementary products, such as firewalls, encryption, and auditing tools, are available from several vendors.

Looking towards the future, it is important to understand the evolution of the Windows family of operating systems.

Microsoft® Windows® 2000 Server

Windows 2000 Server is a multi-purpose operating system, purpose-built to address a full range of business requirements in a single, familiar environment.

Microsoft Windows 2000 Server provides the basis for information technology managers who want to develop architectures for the future, while addressing the computing challenges of today. Windows 2000 operating system will bring advantages in the areas of management, application infrastructure, networking and communications, and information sharing and publishing.

The Windows 2000 platform is comprised of Windows 2000 Professional (previously NT Workstation), Windows 2000 Server, Windows 2000 Advanced Server, and Windows 2000 Datacenter Server. Using both the server and the client versions of the next generation Windows operating systems will allow the building of a computing infrastructure on a lower cost, flexible platform that can readily adapt to changing needs.

Windows 2000 Server is a multi-purpose operating system, purpose-built to address a full range of business requirements in a single, familiar environment. From connecting thousands of employees to company email and accounting systems, to providing simple access to the Internet or intranet, or enabling a secure business environment for partners through extranets – this one operating system allows an organisation to run more efficiently.

Beyond the work Microsoft has done to develop Windows 2000, this operating system builds on the momentum of a large community already supporting Windows NT 4.0. The improvements included in Windows 2000 Server address four areas of particular concern to organisations seeking to lower their 'total cost of ownership' in a networked computing environment:

· Management – managing servers, desktops, and network resources;

· Applications platform – running server-based line of business software;

· Networking and communications – supporting network infrastructure for voice and data;

· Information sharing and publishing – providing access to file, print, web, and streaming media.

Management

Organisations are increasingly dependent on a networked environment that is reliable, predictable, and yet flexible. Adding new users or entire new branch offices to a system cannot cause service interruption or demand full staff attention. Nor can environment changes – adopting a new business process or installing a new piece of software – require a halt to day-to-day operations for network reconfiguration or software deployment. In short, as networks serve an ever-widening range of complex tasks, they require an equally widening array of management capabilities.

Windows 2000 Server satisfies management requirements with an integrated collection of management tools.

Windows 2000 Server satisfies these requirements with an integrated collection of management tools. The Active Directory™ directory service sits at the centre of these services. The Active Directory is a flexible, extensible central repository that stores the information administrators need to keep their network running efficiently. Fully integrated with the operating system, it tracks information about the hundreds or thousands of resources on a Windows 2000 Server-based network, from printers to people, storage devices to software applications. It allows people to easily find and use what they need on the network. Among its many uses, the Active Directory acts as the foundation for the rest of the Windows 2000 management services.

Some of these include:

· A central console for an array of snap-in management tools;

· A set of data gathering resources for monitoring network operations;

· A scripting host that lets the use of the selected scripting language to automate system processes;

· A policy editor to give the facility to assign specific configurations to particular groups of users.

These services will make it much simpler to manage complex networks.

Applications platform

Applications built for Windows 2000 Server use the well-established Component Object Model (COM) that lets companies split processes across client and server systems for the most efficient operation.

Windows 2000 Server as a multi-purpose operating system gives users a familiar set of tools and processes to build and manage the software applications needed to make organisations run better and compete more effectively. For example, the employee data in the Active Directory can also be used to support business process logic used in accounting or ERP applications. Applications built for Windows 2000 Server use the well-established Component Object Model (COM) that lets companies split processes across client and server systems for the most efficient operation.

In addition, applications for Windows 2000 Server can take advantage of a number of services included with the operating system, such as Internet, streaming media, and transaction processing. All these pieces, from directory services to web site creation, are supported by a single set of operating system services that are designed to work together. Windows 2000 Server provides developers with a comprehensive set of services needed to build scaleable business solutions. Because it builds on the momentum behind Windows NT Server 4.0, the next generation server operating system will create an extensive market for third-party software and hardware solutions. These products will address the demands of today's enterprise business applications, as well as anticipating the needs of the most demanding information systems of tomorrow.

Networking and communications

The integrated services of Windows 2000 Server, including the directory services of the Active Directory and integrated Internet communication protocols, make it easier to configure advanced communication systems using inexpensive and widely available hardware and software.

The server operating system has to connect computers together within a building, across the country or world, and – almost certainly – across the Internet. Windows 2000 Server contains services to connect individuals and branch offices to a central network. It also enables customers and partners to have direct connections to the organisation over the Internet. Above and beyond this, the ability to weave in the capabilities of voice and data networks to create intelligent call handling and voice collaboration systems can be exploited.

In turn, these systems can feed into internal software applications – for example, sales order processing and management systems can be supplemented with customer service applications which use voice and intranet features. Since these communication capabilities work directly with the core server operating system, this implies creative, flexible systems without requiring a lot of specialised products to be built. The integrated services of Windows 2000 Server, including the directory services of the Active Directory and integrated Internet communication protocols, make it easier to configure advanced communication systems using inexpensive and widely available hardware and software.

Information sharing and publishing

The real payoff of a strong server operating system is its ability to deliver the information needed, where it is needed, and when it is needed. 'Information' used to mean paper documents – the realm of file and print services. Today what the information companies need to run their businesses is not just paper documents, but also web documents and services and assorted multimedia content.

Windows 2000 Server offers a complete set of integrated and easy-to-use tools and services that will reduce the cost of owning and managing IT systems.

This area of information sharing and publishing is also addressed by Windows 2000 Server. This is a natural extension of the application and communication capabilities mentioned above. Once information is created, the same familiar tools can be used to manage and share material.

In addition to the operating system's file and print services, Windows 2000 Server's web services can be used to create intranets or Internet sites and web-based applications. Media services include server and tool components for creating and delivering streaming audio, streaming video, illustrated audio, and other multimedia types over intranets and the Internet. With the Index Services included in Windows 2000, every document on a network, including web-based information, can be indexed for full text search and retrieval. The same search process will let users find all kinds of information, including web content and other file formats, anywhere on a corporate network.

Windows 2000 Server offers a complete set of integrated and easy-to-use tools and services that will reduce the cost of owning and managing IT systems. It will also deliver a flexible, extensible platform for optimising an existing computing infrastructure. Windows 2000 Server lets companies build network infrastructures that can readily and inexpensively grow to meet new demands and opportunities, without either bypassing or rebuilding existing computing systems.

Technology summary

IT systems must take advantage of the power of new technologies without requiring financial institutions to throw away their existing transaction processing systems.

Financial institutions have a vision for the future of banking: delivering a flexible and responsive service to the customer when ever and where ever the customer requires it.

This vision needs to be supported by flexible, customer-focused IT systems. These IT systems must take advantage of the power of new technologies without requiring financial institutions to throw away their existing transaction processing systems; and they must cost less time and effort to build than in the past.

Windows Distributed interNet Applications Architecture (DNA) delivers a comprehensive set of services that provide a consistent programming model, a consistent development environment, consistent distributed services and a consistent application model to the desktop and the server. These services are powered by the proven technology in the Windows family of operating systems and the Microsoft BackOffice family of applications.

By building to this architecture, banking application vendors can build products that provide higher integration and more flexibility than ever before.

By building to this architecture, financial institutions can more quickly and easily build delivery channel applications that integrate the new technologies with their existing systems to provide more customer service at lower cost than ever before.

Complexity for the end user is being removed, making it cost-effective to deploy client/server solutions on a scaleable common business architecture through the use of Microsoft technologies.

The momentum behind Microsoft's strategy for banking and the financial markets is strong. Complexity for the end user is being removed, making it cost-effective to deploy client/server solutions on a scaleable common business architecture through the use of Microsoft technologies. The principal hardware vendors have their Windows NT strategy in place. The number of applications vendors with products running on Windows NT, Microsoft BackOffice and SQL Server grows almost daily. Finally, the technical and consultancy services available through Microsoft and its business partners are now firmly in place.

For further information, contact:

Nicholas Illidge, European Financial Markets Manager - email: nickil@microsoft.com

Ashley Steele, European Retail Banking Manager - email: ashleys@microsoft.com

Microsoft, Win 32, the Windows logo, Windows, Windows NT and Microsoft Backoffice are either registered trade marks of Microsoft corporation in the United States and/or other countries. AS/400 and IBM are all registered trademarks of International Business Machines Corporation. Novell and UNIX are registered trademarks of Novell, Inc. in the United States and other countries. All other trademarks are held by their respective companies.

The information contained in this document represents the current view of Microsoft corporation on the issues discussed as of the date of publication. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication.

This document is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.