FNB drives unprecedented growth and performance in mobile banking

Achieving sub-second response for hundreds of millions of monthly transactions on the mainframe

Published on 17-Oct-2013

"At FNB, we don't just think of IBM zEnterprise as the platform for our core banking software; rather, it hosts the core functional layers that allow the channels to create value for our customers" - Jay Prag, CIO – Hogan Channels, FNB

Customer:
First National Bank

Industry:
Banking

Deployment country:
South Africa

Solution:
Enabling Business Flexibility, Information Management Foundation, Mobile, System z Software

Overview

First National Bank (FNB) is one of the four divisions of FirstRand Bank Limited within the FirstRand Group, one of the largest financial institutions in South Africa. FNB provides retail, wealth, business, commercial and corporate banking services to more than eight million customers. It also gives its customers access to other services provided by its parent group, including asset finance insurance, and investment fund management

Business need:
The ubiquity and convenience of cellphone and tablets as computing devices represented a clear growth opportunity for FNB; in South Africa, more people have cellphones and smart mobile devices than bank accounts. FNB wanted to launch a reliable, secure and highly responsive mobile channel before its competitors, and looked for a platform that would enable very short time-to-market.

Solution:
FNB integrated a new Java-based mobile front-end directly with tried-and-trusted business logic and core banking services running on IBM® Information Management System (IMS™) on an IBM zEnterprise® EC12 server. IBM IMS Enterprise Suite Connect APIs for Java and C and IBM IMS Enterprise Suite SOAP Gateway manage links between the channel applications and core functionality and data on the mainframe.

Benefits:
Rapid deployment enabled FNB to gain first-mover advantage in the market, gaining the number one spot for mobile banking. Ultra-low average end-to-end response times of 30 milliseconds ensure snappy performance for mobile banking users. Fast, secure and reliable mobile banking generates more business for FNB and reduces its average cost per transaction.

Case Study

Foreseeing that consumer interest in mobile money was set to explode – particularly in a country where far more people have cellphones than have bank accounts – FNB successfully launched South Africa’s first mobile banking app, quickly winning millions of customers.

The secret weapon behind the bank’s lightning speed to market was its uniquely flexible architectural approach, integrating the new mobile front-end directly with tried-and-trusted business logic and core banking services running on IBM® Information Management System (IMS™) on an IBM zEnterprise® EC12 server.

Banking leadership
First National Bank (FNB) is one of the four divisions of FirstRand Bank Limited within the FirstRand Group, one of the largest financial institutions in South Africa. FNB provides retail, wealth, business, commercial and corporate banking services to more than eight million customers. It also gives its customers access to other services provided by its parent group, including asset finance insurance, and investment fund management

Today, FNB is the number one mobile banking brand in South Africa, with the largest number of users and the highest volume of transactions. The bank continues to lead the way in mobile – for example, it recently introduced the country’s first geo-payment app, enabling mobile users to transfer money directly to another person’s cellphone. FNB was named the “Most Innovative Bank of the Year” at the 2012 Financial Global Banking Innovation Awards in New York.

Jay Prag, CIO – Hogan Channels at FNB, explains: “Innovation is at the heart of FNB’s ongoing success: we always look to be first into new markets, and mobile was no exception. Our business has an owner-manager culture in which each business unit focuses on what they need to develop for their specific requirements. Our 90-day development cycles require enormous flexibility at the architectural level, and the ability to bring new products to market very rapidly. The maturity of IMS on IBM zEnterprise makes it the ideal platform for achieving this speed to market.”

Maturity and discipline
FNB has run its core banking systems on IMS on the IBM mainframe platform since the 1980s, and Prag believes that it will continue to be the bank’s strategic platform for at least the coming 20 years. “We certainly see all the classic benefits of IBM zEnterprise – availability, reliability, security, scalability, performance – which is why the core banking functionality and data will always go on the mainframe,” he notes.

“Another critically important factor for us is the maturity of the platform and the management discipline that we’ve built around it. This means that we can build extremely robust and secure code on IMS on zEnterprise, then extend the functionality across the second tier of the architecture, which is all of the channels.”

In the two-tier architecture at FNB, there is no integration layer between the mainframe and the channels, and no replication of data. In most cases, IBM IMS Enterprise Suite Connect APIs for Java and C enables channel applications to call on functionality and data residing on the mainframe; FNB also uses IBM IMS Enterprise Suite SOAP Gateway. The overarching principle is that the look-and-feel and the functionality should be the same across all channels.

“The channels manage the user interface and some of the business logic required to make the interface work,” says Prag. “For everything else, they plug into the core services we provide on the mainframe. This architectural approach gives us a simplified, centralized view of core services, and it keeps all data on the most appropriate platform. For the large volumes of data we deal with, nothing beats the performance and concurrent multitasking capabilities of the mainframe I/O subsystem in conjunction with the database manager component of IMS.

“We don’t start from the premise that the mainframe is best; rather, we look at the requirements – big data, huge numbers of concurrent processes, high performance, high scalability, high security – and then look at what technology can deliver all of those things. The answer is IBM zEnterprise and IMS.”

Enormous growth, lightning speed
Central to FNB's success on the mainframe is its use of IBM IMS, a mature hierarchical transaction and database manager for critical online applications that provides extreme processing availability and speed. Over the past ten years, IMS workload at FNB has grown eight times, and the platform now handles up to 920 million transactions each month. Customer-initiated transactions – including mobile – have doubled every year for the past six years.

“With IMS as our core orchestration and business logic execution layer, we have true 24/7 service capability and the ability to manage growth without worrying about scalability,” says Prag. “IMS hierarchical structures manage data in a much more efficient way ensuring that we have scalability and growth all catered for with our IMS Transactional and Database management solutions. We are using 30 TB of storage

Delivering on customer service
Mobile banking users expect fast service at all times; IMS on zEnterprise provides average end-to-end response times of just 30 milliseconds. On peak usage days in a typical recent month, the bank recorded just 1,500 mobile transactions out of a total of 50 million that took longer than its target of one second – or 0.00003 percent.

“The IMS Fast Path database concept together with IMS High Availability Large Database support is a key enabler for the phenomenal end-to-end response times we are able to offer mobile banking users,” comments Prag. “Delivering a reliable, secure, convenient and high-performance service is critical in helping us move customers from branches to mobile devices. That is strategically important because our overall business can grow much faster on mobile, where we don't have the physical constraints and costs of a bricks-and-mortar operation.

“Since 2010, monthly transactional volumes in our branches have fallen from 16 million to 10 million, while online transactions have risen from 68 million to a peak of 162 million, and mobile transactions from 89 million to 158 million. This is all about reducing the cost of transactions and improving and ensuring the same customer experience across our online and mobile channels. channels.”

Building the future with System z
With all mainframe development handled in-house, FNB ensures a healthy supply of sustainable skills on the platform through its internal academy. Each year, the company trains 15 individuals from disadvantaged communities to be COBOL programmers, and runs similar programs for other technology areas.

“At FNB, we don't just think of IBM zEnterprise as the platform for our core banking software; rather, it hosts the core functional layers that allow the channels to create value for our customers,” concludes Prag. “Anything that needs to be available across all channels goes on the mainframe, making it critically important that we continue to build up our mainframe capabilities and skills.

“The result is that customers using the mobile channel enjoy convenience and speed, freeing up in-branch tellers to focus on value-add services and building the FNB brand.”

Products and services used

IBM products and services that were used in this case study.

Hardware:
System z, System z: System z running z/OS, System z: zEnterprise EC12 (zEC12)

Software:
IMS Enterprise Suite, z/OS, IMS Enterprise Suite SOAP Gateway, IMS High Performance Fast Path Utilities for z/OS

Operating system:
z/OS and OS/390

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation. Software Group. Route 100. Somers, NY 10589. Produced in the United States. October 2013. IBM, the IBM logo, ibm.com , IMS, RACF, zEnterprise, z/OS and z/VM are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Java and all Java-based trademarks and logos are trademarks or registered trademarks of Oracle and/or its affiliates. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.