Linux Usage in Banking Industries

8/13/2019 Linux Usage in Banking Industries

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REASERCH ON:

LINUX USAGEIN THE BANKING INDUSTRY:

CONTENTS;

ABSTRACT

1. INTRODUCTION TO LINUX. LINUX HISTORY. WHAT IS LINUX? LINUX STANDARDS. IBM AND LINUX. REQUIREMENTS FOR LINUX USE IN BANKING SYSTEM. LINUX PROGRAMMING OBJECTIVES.

2. CASE STUDIES BANK BRANCH SYSTEM. LINUX USAGE IN AUTOMATED TELLER MACHINE. LINUX INVOLVEMENT IN ATM SOFTWARE. LINUX INVOLVEMENT IN ATMS IN BRAZIL BANKS. THE BANK OF TOKYO-MISTUBISHI(BTUM)OF JAPAN BANK OF NEW ZEALAND MIGRATION TO LINUX.

-CHALLEGES BEFORE MIGRATION TO LINUX

-SOLUTION TO THE CHALLEGES.

-BENEFITS OF THE MIGRATION.

HALK BANK TURKEY-SUSE CASE STUDY.

SPARDA-DATENVERARBEITUNG. EG(SPARDA BANKING GROUP) BANKIA MIGRATES TO IMB INFOSPHERE SOFTWARE ON LINUX.

3.ANALYSIS CHALLENGES BEFORE MIGRATION TO LINUX. SOLUTION TO THESE CHALLENGES. THE BENEFITS OF MIGRATION TO LINUX.


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ADVANTAGES OF USING LINUX IN THE BANKING SYSTEM. DISADVANTAGES OF USING LINUX IN THE BANKING SYSTEM

4. FUTURE TRENDS IN LINUX.5. CONCLUSION6.

REFERENCES.


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ABSTRACT:

- A bank is a financial institution and a financial intermediary that accepts deposits andchannels those deposits into lending activities, either directly by loaning or indirectly

through capital markets.

- A Banks also pays for cheques drawn by customers on the bank, and collecting chequesdeposited to customers' current accounts. Banks also offers other forms of payments

such as the case for automated teller machine (ATM).

- Banks also do accept deposits on current accounts, by accepting term deposits, and byissuing debt securities such as banknotes and bonds. Banks also offer loans to customers

who then pay at a later date.

- Banks use computer softwaresto manage their daily transactions, safeguardcustomersdata, evaluate developments etc.

- In the modern world many individuals and companies have turned to banks forsafeguarding, saving and even coming together to create services that enable customers

to pay for products through banks.

- This has led to the number of accounts and transactions increasing rapidly over theyears.

- Due to this increase it has been deemed mandatory for the banks to try and adjust withthe changing technology so as to cater for the growing customersneeds and also being

able to do so without incurring a lot of expenses.

- This has been made possible by Linux introduction to the computer and software worldas it has helped many financial institutions to adapt to changing numbers of transactions

and data and enabled them to help them solve all their problems without incurring

major costs.

LINUX USAGE IN THE BANKING INDUSTRY:

LINUX HISTORY.

WHAT IS LINUX?

-Linux is one of popular version of UNIX operating system. Linux was designed considering UNIX

compatibility. Its function list is quite similar to that of UNIX. It is assembled under the model of

free and open source software development and distribution. The defining component of Linuxis the Linux kernel.

-Linux was originally developed as a free operating system for Intel*86- based personal

computer. It has evolved over the years to be used by more computer hardware platforms than

any other operating system. It currently leads usage on servers and other big systems such as

super and mainframe computers.


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-Linux also runs on embedded systems (Built in operating system in devices) such as mobile

phones, tablets computers, network router, building automation controls, televisions and video

games consoles. The android system is also built on Linux kernel.

-Linux development is one of the best examples of free and open source software

collaboration. The source code maybe used, modified and distributed- commercially and non-commercially by anyone under licenses such as the GNU (General Public License).

-Linux supports all the major windows managers and all the internal utilities, such as

FTP TELLNET SLIP

- It provides true 32-bit and 64-bit multitasking, virtual memory, shared libraries, and TCP/IP

networking. It also has a full set of program development utilities including c++ compilers and

debugs.

-Linux consists of four major components:

The kernel The shell The file structure The utilities.

-Linux is used mostly on Intel-based processors although it has been used across a variety of

hardware platforms.

-Linux makes use of protected-mode, features of Intel 80*86 processor. Hence it uses theprotected-mode, disruptorbased memory management paradigm.

- The kernel is the lowest-level core factor of the operating system, it is the code that controls

the interface between user programs and hardware devices, scheduling of processors to

achieve multitasking.

- -Linux also exploits the multitasking capability of 80386 protected mode programming. The

Linux kernel supports demand-paged loaded executable so that only those segments of a

program that are actually used are into memory from disk.

-Linux kernel includes many improvements specifically designed for enterprise. It has inbuilt

support for eight-way symmetric multiprocessing, and the TCP/ID stack has been rewritten to

increase stack performance and provide better scalability in multiprocessing systems.

Linux history:

- Linux is a freely distributed version of UNIX.


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- Linux was developed by Linus Torvalds in 1991 who by then was a University Student at the

University Of Helsinki in Finland.

- the development was done on minix using the GNU C compiler which even today is still the

main choice for compiling Linux but one can also use the Intel C Compiler.

Naming of Linux:

- Linus Torvalds had wanted to call his intention freax. In order to facilitate development, the

files were uploaded to the FTP Server of FUNET in September 1991, Torvalds core-worker, Ari

Lemmeke, did not think freax was a good name so he changed the name of the project to

Linux without even consulting Torvalds, but he also later consented to the name.

- Two years later after its invention and development it had gained more than 12000 users

worldwide. It has grown rapidly since then.

- All features of UNIX were added over the years which made it grow into a mature operating

system.

- Linux is a full UNIX clone which can be used on work stations as well as middle rage and high

end servers.

LINUX STANDARDS:

-Linux is a Posix-compliant operating system, and its constituents subsystems support all

relevant:

ANSI STANDARD. ISO STANDARD. IEFT STANDARD. W3C STANDARD.

- It was developed according to the posix standard which defines how a UNIX-like system needs

to operate, specifying details such as calls and interfaces.

-Linux also provides a complete implementation of TCP/IP networking.

-The Linux TCP/IP system provides a standard socket programming interface so that any

program that uses TCP/P can be ported to Linux.

-Linux also supports the standard iso-9660 file system for CD-ROMS. It also consist UNIX

standard IP and Apr. software for its printing software. Any parallel printer Linux supports the

full range of serial modems, both internal and external.

-The range of interfaces and capabilities that have become standard across virtually all

operating environments are also available for Linux and implementation open source code and


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based on industry standard. This combination provides a stable predictable environment for

developing, porting, or running business-critical applications.

IBM AND LINUX:

-IBM is involved in all stages of the Linux phenomenon.

I. Contributing code and skills to Linux development itself.II. Delivery Linux ready hardware platforms in conjunction with established Linux

distributors.

III. Porting IBMs industry leading middle to Linux.IV. Providing open-access Linux developer resources.V. Helping support through IBM multi-vendor software support contractor.


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REQUIREMENTS FOR LINUX USE IN BANKING.

-The solution architecture must be:

Open. Scalable. Easy to implement.

-These principles are related to the architecture objectives and are the basis for:

Platform selections requirements of the solution. Programming model specifications requirements of the solution. Overall functional requirements of the solution.

-These objectives are well illustrated as follows below:

1. OPEN. Supports industry standards: architecture is open when it uses open Industry and e-

business standards, such as TCP/IP, HTML, HTTP, Java, JDBC, and Java Server Pages

(JSPs) wherever possible. These Standards serve the following function:

Provide a solid foundation and make it easier to use available provencomponents instead of building custom ones and to change Vendors and

implementations to satisfy changing business requirements.

- Industry standards tend to be strategic and have longer life spans because of the highlevels of investment and commitment involved with creating them.

Extendable and customizable: architecture must be built to be extendable and customizable atmany different layers or channels. Meaning the architecture can be used in a wide range of

situations and can accommodate specialized requirements that are specific to an individual

channel, customer, country, or region.

Provide insulation: The solution architecture must isolate and abstract interactions with othersystems to insulate architecture-based applications from the specifics of other systems. In a

global solution, this is essential to provide the flexibility to adapt too many diverse

environments, particularly different host systems and databases.

Preserve investment: The principles listed above ensure the preservation of customerinvestments. The solution architecture safely preserves the investments in current hardware,

software, operating systems, network, communication infrastructure and protocols, and back-

end subsystems of the customer environment.

2. SCALABLE.- Logical tiers: a good example of a logical tier isNetwork Computing Architecture. The

benefits of logical tiers are:


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a. Logical tiers are logical this means that they can specify the presentation layerfrom the business logic. It also provides scalability by making sure each of the

layers of the system change independently of the others. That is, the platform

selections and design of each layer can change without impacting the rest of the

system.

b. The architecture should ensure that the presentation is thin so as to achieve thegoals of the network computing. This is an advantage because a workstation

with no virtual memory and has only a small physical memory will be able to

download it.

c. Solution architecture should be able to support the model of a multi-tiernetwork computing application. This also allows engament teams to be able to

implement solutions based with other application models a good example being

the two-tier fat client application.

Replaceable components: a component is a package of any given system functionwhich has established interfaces and a very determined execution environment. The

components can interact with any other system components using the public interface

which is replaceable with minimal effort. This makes it possible to reuse the system

without causing large ripple effects. It also allows the implementation and execution of

components to vary so as they can meet the required performance or scalability

3. Enterprise topology independence: this means that the tiers are not only independentof their physical location but also the systems components are also independent of their

physical location. This is an added advantage as it makes the solution flexible hence they


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can be used in different environments as the customers can configure the system to

achieve scalability for the environment desired.

4. EASY TO IMPLEMENT. Should haveVisual programming: visual programming is a technique which is very

important and good in developing application screens and also assembling the graphical

user interfaces.

Implementation should have Separate analysis from design: this means that whenimplementing any program the analysis should be different from its design that is the

analysis should have its own work products distinct from its design. The product should

have a separate logical representation of the system function which should be

independent of technology or even the implementation. This will help in retaining value

of earlier developments.

Development methodology: this methodology helps in making the developmentprocess easier hence making the solution implementation also easier and faster.

Transaction-oriented: a well-defined architecture should have this requirement andmostly in a high-volume transaction processing environment this enables it to adapt

well to changes in number of transactions and to give perfect results. Most branches

require a transaction oriented system which will be able to behave as a transaction

posting engine and also manage to run the transactions in the back-end system

Development effort: a good way to make sure that transactions have beenimplemented or even the applications have been implemented is always based on the

parameters externalization. Therefore different businesses have different external


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parameters depending on their operations and implementation processes. This enables

solutions to deliver new functions and capabilities without requiring new coding, simply

by adding new external parameters to the system.

LINUX PROGRAMMING-RELATED OBJECTIVES.

- The Java programming language is the main language used today to come up with newbusiness applications or even readjusting existing applications. A good Internet

technology should be able to create reusable components within an overall framework

for the businesses applications.

- By doing so the component based applications will be easily used with a lot ofconfidence to lead to robust production systems, while the framework will be able to

give to your components completeness and consistency.- A good application development should have a shared central repository which usually

supports the components reuse and object definitions

- The design of application development hides all the technical issues from the designerswhich will in turn help them to focus on the business functions of the applications rather

than the technical details.

- These features helps in creating advantages in areas such as project completion timecost effectiveness and the preparedness for future changes and improvements hence

enhancing evolution of the development.

- These objectives are as follows:- Reduced risk: its very fast and efficient hence making it very rare to be having risks

when working. That is the components.

Proven product: this means the components produced are very mature foundationwhich its main work is to support products developed for software applications

which are later used in the financial sector.

Systems work together: this means that the systems are compatible to each other.This is made possible due to the use of open computing industry standards.

Should be protected against obsolescence: the applications can never becomeabsolute as there are well protected by the flexibility and ability to updatecomponent-based applications.

Quick reaction to business condition changes: this means that all the applicationdevelopment will allow fast changes to applications accordingly due to changes in

business conditions.


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Support team work: team work promoted dialog hence leads to sharing of ideaswhich will result to improved and finer detailed applications. Therefore the

application development environment should support teamwork.

Should be able to maintain a very stable IT infrastructure: this means that theavailable systems should be able to provided services through communicationssystems. The components ensure there is connectivity to legacy systems.

Should hold a faster time to market: components should be easy to learn by theproject team its development cycle should be short. This approach saves

development efforts and also improves consistency which will in turn reduce the

time to market delivery for all channels.

Should have prebuilt components: the framework should have inbuilt or ratherprebuilt components with the interface being well defined. This will allow the

project teams to only have the work of learning how to use them and it will be ready

to be sent into delivery channels.

Easy addition of application definition: this means the model applications usuallyinvolves little more than adding new definitions to Development Workbench

Repository.

Easy learning and usage components: any component based framework will hidethe technical details of the framework. In turn this reduces time and effort needed

by the project team to learn and use the framework features to give a solution. It

also allows the team members to focus only on their specific skills and tasks.

CASE STUDIES:

THE BANK BRANCH SYSTEM.

- In any given bank workstations. These workstations which its major function is to provide an

end-user interface to the branch banking system for users, and servers provide connectivity,

data access, or other system management functions to the workstations.

- The work stations are all connected through a physical network, where one or multiple

protocols are responsible for fast, stable, and reliable communication.

- The branch automation systems enable the teller and platform personnel to process

customer transactions, access customer account information, and generate reports.

- The Central systems store customer information, transaction, and account data, and the

branch systems access this information.


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- In ATMs branch automation systems enables platform personnel and tellers to have or

provide detailed customer account information and sales prompts for cross-selling and up-

selling.

1. LINUX USAGE IN AUTOMATED TELLER MACHINE.- ATM is the short form of Automated Teller Machine which is an electronic

telecommunications device that enables the clients of a financial institution for example

a bank to perform financial transactions without the need for a cashier, human clerk or

bank teller.

- An ATM helps customers access their bank accounts in order to make cashwithdrawals, deposit cash into their bank accounts debit card cash advances, and

check their account balances as well as purchase pre-paid mobile phone credit and

purchase goods in supermarkets and store.

- ATMs often provide one of the best possible official exchange rates for foreign travelers,and are also widely used for this purpose. For example If the currency being withdrawn

from the ATM is different from that which the bank account is denominated in (e.g.:Withdrawing Japanese Yen from a bank account containing US Dollars), the money will

be converted at an official wholesale exchange rate.

- When ATMs were introduced 30 or so years ago, banks viewed these devices asA low-cost alternative to providing routine banking services. Consumers viewed

An ATM as a convenient alternative to teller branch banking, because it advantages such

as it offered extended access to their accounts, available during extended hours, and

also it was faster compared to waiting in long lines to be served.

- In the beginning these machines were simply automated cash machines, but over theyears more advanced functions have been added as these terminals have

Been used more widely and banks have recognized the lower costs of processing

Routine transactions through these terminals.

- These machines continue to evolve, incorporating not only additional customer-initiatedbanking transactions, but also other dispensing capabilities, such as stamps, phone

cards, and tickets.

- A majority of banks and organizations provide their customers access toTheir banking accounts through ATMs.

- These terminals are deployed in nearly all bank branches, as well as many non-banklocations, such as convenience stores, supermarkets, shopping centers, and tourist

venues.


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- Today the ATMs has been added various additional functions and transactioncapabilities have been offered at the ATM however, an evaluation of ATM transaction

volumes indicates that many consumers still view these devices simply as cash

machines. Approximately two-thirds of consumers use the ATM, and for a large majority

of these consumers, ATMs represent an essential banking channel that offers

convenient access to cash.

LINUX INVOLVEMENT IN ATM:

- As we have seen above an ATM being an electronic telecommunication device thathelps bank clients to easily make bank transactions such as cash withdrawal and

depositing etc. we can also define an ATM as simply a data terminal with two input and

four output devices.

- Like any other data terminal, the ATM has to connect to, and communicate through, ahost processor.

- The host processor is analogous to an Internet Service Provider (ISP)Which means it is the gateway through which all the various ATM networks become

Available to the cardholder.

- Most host processors can either support leased-line or dial-up machines.-

Leased-line machines connect directly to the host processor through a four-wire, point-to-point, and dedicated telephone line. While Dial-up ATMs connect to the host

processor through a normal phone line using a modem and a toll-free number, or

through an Internet service provider using a local access number dialed by modem.

LINUX INVOLVEMENT IN ATM IN BRANZIL. (Bancodo Brazil)

- Brazilian banking giant Banco do Brazil has decided to make a massive migration of one of

the world's biggest ATM fleets to the GNU/Linux operating system.

- The news is a big boost to the ATM industry reason being Brazil is the world's third-largestATM market, the largest being Japan and the United States in the number of placed units.

- And while most financial institutions of substantial proportion are moving or have moved

their ATM fleets from OS/2 to Windows, Banco do brazil and a handful of other Brazilian banks


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are opting for Linux , which is a free and open OS invented by a famous Finland's scientist Linus

Thorvalds.

- The move a Linux OS, industry experts say, will allow banks in Brazil to have more control,

since most will likely develop their own ATM software or lean on multivendor solutions, rather

than having to be so proprietary-driven.

- Although often overshadowed by Microsoft's Windows, Linux is no feeble competitor. It's

supported by giant software players such as

IBM. Oracle. Hewlett-Packard.

- Banco do Brazil has about 25 million clients that use its ATMs, which see close to 450 milliontransactions per month. These huge numbers of transactions made the bank migrate to Linux

so as to improve and maintain its services without a rise in expenses.

- The bank in 2005 initiated its Linux-migration testing for its ATMs.

- The bank's goal was to have around 70 percent of its ATM fleet running Linux by 2010 which it

did achieve.

-Thus, the entire ATM fleet will eventually be running on Linux.

-Others in Brazil also are expected to make a move toward Linux in coming years, likely the

result of Banco do Brazils new ownership of several of the country's smaller, government-

controlled banks.

- The bank in 2003 began migrating its servers to Linux. Today all of its 5,500 servers are

running Linux.

- The government's push for open-source adoption is expected to reduce costs and

dependence on multinational corporations, namely Microsoft, as well as foster a local software

industry. In fact, Brazil's governing leaders are so committed to the effort that they have been

calling upon other emerging markets to take similar measures.

- The Linux ATM pioneer among Brazilian banks was Banrisul. Banrisul, which initiated its Linux

switch in December 2000; it completed the migration in mid-2003. Today, Banrisul's more

than 2,500 ATMs all run on Linux. Banrisul executives say the move was a technical decision,


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and not part of a complete software change at the bank. The machines were running on DOS

and a migration to Windows would have required a very significant investment, hence Linux

was a very optable choice as its migration is much cheaper and very much benefit able

compared to other operating systems including windows.

2. THE BANK OF TOKYOMISTUBISHI (BTUM) OF JAPAN:

- This is japans largest bank in terms of assets with over 40 million personal bank accounts and

over 500000 corporate clients. Due to the high number of customers the bank needed a high

well defined, efficient and fast banking managing software which could meet all the customers

demands for access to financial services anytime, anywhere, and through any device.

Solution:

For the bank to achieve this using minimal resources, it decided to use the IBMWEBSPHERE MESSAGING BROKER, which is

I. MQ-basedII. Has a highthroughput messaging backbone.

III. Has a strong successful track record in the financial sector. The solution employed the IMBz enterprise 196 as its platform, divided by logical

partioning, with SUSE Linux Enterprise Server as the operating system.

Benefits of this migration to Linux:

The bank has accelerated its ability to build its servers in response to business issues andhas a service re-utilization rate increase by more than 18%

The platform which was released initially to cover three systems and nine services. Intwo and a half years the use of the platform has expanded to 23 systems and over 150

services.

THE BANK OF NEWZEALAND:

Background:

- For the last 150 years the bank of New Zealand helped individuals, farmers, andbusinesses with their financial pursuits. But in time this bank has grown and

remarkably evolved to meet changing customer needs and expectations while also

at the same time going on to deliver innovative new products and services.


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- The bank of New Zealand is the leading banking and financing industry in NewZealand.

Challenges faced;

- The bank was close to reaching capacity in its data center due to its growingcustomer and corporate accounts and operations and it needed to determine how

to maximize space while keeping its cost down.

- The banks corporate values also have a carbon neutral focus, which it has keen toput into practice across all aspects of its business operations.

- The bank had three major goals which it wanted to achieve. They included: To become carbon neutral by 2010. To explore open source opportunities through adoption of Linux. To create a disaster recovery solution. Its data center one in

Auckland, New Zealand and the other in East Melbourne,

Australia which are separated by Tasman Sea.

Solution to the challenges;

- It change completely its mission-critical front end IT environment, including itsinternet banking and bank teller functions through to core backed data. It migrated

its system to Red Hat Enterprise Linux 5 running under z/VM on the main framecomputer.

- Many banks did an overhaul on all its system a good example is IBM z10 system usedin production, as well as one IBM z9 system for use as a disaster recovery machine.

Both mainframes exclusively run Red Hat Enterprise Linux 5, IBM Webspere

application and IBM process server, alongside with customized JAVA applications by

the B.N.Z

-

The combination of z/VM and Red Hat Enterprise Linux 5 enabled BNZ to virtualizeand consolidate a largely distributed SUW environment, which incorporates all its

front-end systems to just one box and runs it in a manner that didnt present a

significant change for administration stuff.


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- They choose Linux due its commitment to the ongoing development of the platformand its strong support capabilities, particularly in reference to support Red Hat

Enterprise Linux 5 on the main frame.

- To date the bank has consolidated 131 SUN SPARC systems to Red Hat EnterpriseLinux 5 on IBM system z. This include:

V440s. V280RS. E10KS.

- On the high end.Benefits of the migration to Linux;

-

The migration for BNZ to Red Hat Enterprise Linux 5 on IBM system z platformproduced impressive returns and exceeded expectations.

- After three months of the migration, the project was ahead the schudule and openbudget it was able to consolidate its servers and reduce its front end systems data

center foot print by 30%.

- It also had significant cost advantage with approximately 20% ROI expected over thelife of the platform.

- Reductions of front-end power consumption by 40% meaning their goal of becomingcarbon neutral were also achieved.

- Since migration BNZ has recorded over 33% reduction in heat output and 39%reduction in carbon dioxide emissions for its front-end systems.

- It also boosted its speed and simplicity of new deployments, with just oneadministrator needed per 100 virtual servers, BNZ can save as resources traditionally

used to manage the platform.

HULK BANK OF TURKEY.

BACKGROUND:

- Halk Bank was founded in 1938; it offers corporate, commercial and retail bankingservices to more than 7 million customers throughout Turkey.


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- The bank has a very extensive network comprising more than 700 branches andmore than 1270 ATMs and also in other services it provides also internet and mobile

banking.

- In an effort to cut down complexity and costs in its environment Halk Bank has plansto grow on SUSE, this is a Linux Enterprise server for system z on the IBM z

Enterprise 196 systems. Once fully implemented the SUSE solution will simplify

maintenance, deliver improved reliability for critical banking services.

Challenge faced before migration to Linux;

- The bank wanted to strengthen its positions as one of the countrys leading banks interms of customersnumbers, credit and deposit volumes and profitability.

- So as to establish itself and set itself apart from market competition, the bank needsto offer customers high-quality products and rapid, secure transactions at an

attractive price.

- Due to this the number of customers and transactions volumes grew each year. Itbecame a challenge for Halk Bank ensures the highest possible service levels, while

keeping administration cost and expenses and effort to a minimum.

- So as the bank grew it needed a simplified and scalable infrastructure rather thanmanaging an expensive and complex infrastructure. As they wanted to reduce costof producing IT services to its customers and users without sacrificing availability or

performance.

Solution to the challenges;

- The bank chooses IBM mainframe z Enterprise 196 z196 servers to support itsbusiness applications. Its next step was to select an operating system to support its

new application environment on the z196.

-

After checking and evaluating the different Linux distribution available for use onmainframe, the Halk Bank chooses SUSE Linux Enterprise Server for system z as the

strategic platform for its application servers.

Advantages of SUSE.

- SUSE offered a good local support.


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- The strong collaboration between SUSE and IBM and the SUSE Linux EnterpriseServer for system z really is optimized to the IBM mainframe any new feature

introduced would be used efficiently.

- By combining robust IBM z/VM virtualization technology with SUSE Enterprise Serverfor system z, the bank can maximize its utilization of the mainframe.

- By choosing the SUSE solution providing broad and ever expanding applicationportfolio, therefore the bank can efficiently run a wide range of applications with

maximum performance.

Results;

- Significant savings on the software licensing and development costs on futurehardware investments.

- Reduction in administrative effort due to the platforms high availability and easymanagement.

- With SUSE Linux Enterprise Server for system z the bank will be better equipped toscale its IT environment to support future business growth and manage constant

development for new products and still being able to maintain high levels of services

to both internal and external users.

SPARDA-DATENVERARBEITUNG (SPARDA BANKING GROUP).- SDV is the IT developer for the Sparda Banking Group in Germany which serves

almost more than 4.2 million customers.

- The SDV develops secure and innovative IT solutions for retail banking, payment anddistribution and financing.

- SDV also has a central core banking system MBS that manages customer data andis used by all the companys clients.

Challenge faced by the bank;- SDV was one of the first companies in Germany to install the latest generation

mainframe from IBM (IBM z Enterprise 196), hence with its online banking system

running on the main frame, the company needed to maximize stability

Solution:


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- It deployed an IBM z196 with a SUSE Linux Enterprise server. This helped it tomanage its large data that it had and also run the functions smoothly with no raise in

expenses occurring.

BANKIA;

Background;

- It is situated in Spain. it was established in 2011 after the merging of seven banksnamely;

i. Caja Madrid.ii. Bancaja.iii. Caja Insular de Canarias.iv. Caja Avila.v. Caja larentana.vi. Caja Segovia.

vii. Caja rioja.- Currently it has more than 11 million customers and it is the third largest banking

group in terms of the total assets.

- The banks model of services is based on a multi-brand and multi-channelmanagement that is it covers each and every market segment from privateindividuals and small companies to large corporations and public institutions.

Challenges:

- It needed to maintain its reputation after the formation for excellent customerservice it was to compete with rivals.

- It needed to gain the confidence of potential clients and convert them into loyalcustomers and maximize customerssatisfaction.

-

This depended on Bankias ability to manage customers data and guarantee fastresponse times to customer demands.

- Due to the merging, the bank had inherited many disparate systems which made itdifficult to manage customer data as a single information resource. This made it

unable to effectively cope with the demands of the business and ensure high levels


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of servi9ces. It surely needed a way to streamline its processes without completely

redesigning its information infrastructure.

Solution;

- Its IT team decided to integrate its formation resources to a single, centralizedplatform based on IBM system z technology.

- IBM proposed IBM Info sphere Data stage software running on the IBM system zservers, this is a core module of IBM Info sphere Information Server Software, which

it uses to collect and integrate customer data from multiple source systems of all the

seven banks and to ensure the reliability and consistency of information acro9ss the

entire business.

- Bankia choose to run the IBM Info sphere software on li9nux system z whichcombines open standard of Linux with the power and resilience of the IBM system z

mainframe.

- Bankia is also leveraging advanced IBM z/VM virtualization capabilities to maximizethe scalability and simplicity of its server environment.

- It is also able to run on many virtual Linux services on a single physical server andthis reduces time and effort to provision new server environments.

Results:- Increased control over a vast range of information processes, meaning data from all

systems will now be standard and accessible from a central repository system z.

- Ability to host multiple virtual Linux servers on systems z has helped in maximizingresource utilization and reduces data center complexity hence reducing its server

footprint, generating savings on energy and cooling costs.

- With the single source of integrated, validated data, the Bank can developinnovative analyses and also can be able to create forecasts on businessexpectations with the data given being accurate and secure.

- The migration also made it able to enhance the banks marketing campaigns, byanalyzing clients behavior for various factors such as total profitability, likely future

spending and exposure to risks.


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- With single repository for all clients data, it is possible to gain an integrated view;hence the bank can adjust its commercial strategy and meet clients needs more

efficiently.

ANALYSIS:

Challenges before migration to Linux.

- Huge competition in the market: Any bank will want to strengthen its positions asone of the countrys leading banks in terms of customers numbers, credit and

deposit volumes and profitability. So as to establish itself and set itself apart from

market competition, the bank needs to offer customers high-quality products and

rapid, secure transactions at an attractive price.

- High number of customers and transactions: Due to this high number of customersand transactions volumes which grew each year. It became a challenge for many

Banks ensure the highest possible service levels, while keeping administration cost

and expenses and effort to a minimum.

- Need for a simplified and scalable infrastructure: So as the bank grows it needs asimplified and scalable infrastructure rather than managing an expensive and

complex infrastructure. As it wants to reduce cost of producing IT services to its

customers and users without sacrificing availability or performance.

- Reaching capacity in data center: Due to rapid economic growth many banks areclose to reaching capacity in its data center due to its growing customer and

corporate accounts and operations hence there is need to determine how to

maximize space while keeping its cost down.

- Achieving the carbon neutral mark: The banks corporate values also have a carbonneutral focus, which it has keen to put into practice across all aspects of its business

operations.

Solution to the challenges.

- IT teams in various banks have decided to integrate its formation resources to asingle, centralized platform based on IBM system z technology.


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- IBM proposed IBM Info sphere Data stage software running on the IBM system zservers, this is a core module of IBM Info sphere Information Server Software, which

it uses to collect and integrate customer data from multiple source systems and to

ensure the reliability and consistency of information across the entire businesses

and bank systems.

- Another good example is Bankia which choose to run the IBM Info sphere softwareon Linux system z which combines open standard of Linux with the power and

resilience of the IBM system z mainframe.

- Also Bankia is also leveraging advanced IBM z/VM virtualization capabilities tomaximize the scalability and simplicity of its server environment.

- Choosing the IBM Z Enterprise Linux 5 which is also able to run on many virtual Linuxservices on a single physical server and this reduces time and effort to provision new

server environments.

- Banks also have chosen to use the IBM mainframe z Enterprise 196 z196 servers tosupport business applications this in return needs a proper operating system which

could enable it to run efficiently. After checking and evaluating the different Linux

distribution available for use on mainframe, one can choose SUSE Linux Enterprise

Server for system z as the strategic platform for its application servers.-

Benefits of migration to Linux.

- Significant savings: The banks, companies and also individuals have experiencedsignificant savings on the software licensing and development costs on future

hardware investments. This has been made possible by the minimal requirements of

the operating system to the hardware configuration.

-

Reduction in administrative effort;this is due to the platforms high availability andeasy management. This reduction is due to the ease in usage of the operating

system.

- Future business growth: With SUSE Linux Enterprise Server for system z the bankwill be better equipped to scale its IT environment to support future business


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growth and manage constant development for new products and still being able to

maintain high levels of services to both internal and external users.

- The bank has accelerated its ability to build its servers in response to business issuesand has a service re-utilization rate increase by more than 18%

- Easy and cheap to adapt to: migration to Linux is easy and very fast. This helpscompanies save on time and expenses. A very good example is in the bank of new

Zealand which after just three months of the migration, the project was ahead the

schedule and on budget it was able to consolidate its servers and reduce its front

end systems data center foot print by 30%.It also had significant cost advantage with

approximately 20% ROI expected over the life of the platform.

- Power reduction leading to carbon neutral achievement: This happened in theBank of New Zealand with the migration to Linux it made it possible for the

reductions of front-end power consumption by 40% meaning their goal of becoming

carbon neutral was also achieved.

- Reduction in carbon dioxide emission: a good example in this is the migration ofBank of New Zealand which has seen it record over 33% reduction in heat output

and 39% reduction in carbon dioxide emissions for its front-end systems

-Advantages of using Linux in banking systems.

- Linux has a good commercial support-in todaysworld the three main commercialLinux providers that is Red Hat, Novell and Canonical offer the 24*7*365 support

which supports mission-critical applications and business services.

- Linux has a good Net Support- Novell owns and supports the mono project thatmaintains NET compatibility. The mono provides businesses with the ability to make

a choice and resist vendor lock in. the mono also offers visual studio plug ins so that

NET developers can easily translate windows based NET application without

changing development tools.

- UNIX uptimes- Linux is a more stable operating system it offers business ownerspeace of mind that their applications will not be affected due to operating system


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instability. Linux can support 99.999% available service requirements meaning it can

reboot after every patch, service pack.

- Linux is more secure: Linux may not be 100% secure just like any other operatingsystem but it is more secure than the rest. Security is maintained by Linux code

which carries out regular updates to an almost daily list of security data. It also

makes it possible for users to access every available security fix. In Linux one has

worldwide community providing security fixes other than windows which its a single

company with closed source code.

- Linux can run on old hardware:Linux can run on out of date systems meaning forone to use to use Linux or upgrade Linux it does not require to do an expensive

hardware overhaul upgrade. Linux runs on *86 32 bit and 64 bit architecture making

it cheaper to migrate to than any other operating system.

- Linux is free:Linux is free of charge it is also free of patents and other restrictionsthat make it unwieldy for creation business owners who may want to change or edit

the source code. It is this ability that has helped create companies like Google who

have taken ability and converted it into big businesses.

- Worldwide community: these means Linux has many worldwide developers whocontribute to the source code and security fixes and systems enhancements. Thecommunity also offers support business through forums and community sites, hence

giving Linux users peace of mind as there is no single point of failure.

- The Linux foundation: this is a corporate collective of platinum support includingfujitsu, Hitachi, Hp, IBM, Intel, NEC, Novell and Oracle. Its members through

donations sponsor Linus Torvalds and others who work on Linux full time to

promote, protect and standardize Linux. It ensures a continued development of

Linux.- Regular updates: every Linux distribution offers a regular updates of its packages

and source code several times per year and security fixes as needed. It also easy to

upgrade and update Linux and the best part is there is no reboot required.


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- Safer from viruses: Linux has less than a hundred known vires compared to windowswhich have over a hundred viruses. Linux always requests the user for their

password before installing any software hence its hard for the user to install

malware and running virus programs.

- Linux is not prone to crushes: Linux running under Linux may have uptimesexceeding over a year which means a computer can continuously run over a year

without a single crash or reboot.

Disadvantages of using Linux.

- Lack of compatibility: this happens because many hardware and software publisherssee the number of those using Linux as very small, thus you may encounter some

incompatibility issues when installing programs or devices like printers.

- However not all devices are incompatible, and for those that are incompatible that isif two or more of your devices are not supported by a particular version of Linux,

install another version which are freely found for downloads.

- Linux has a different working mechanism: If one is used to windows alone, it maytake a while to get used to the way Linux works that is from installing software to

running programs, things are a little different in Linux-based systems.- One has also to be prepared to type a few new commands as well. However, there

are programs within some versions of Linux, such as Ubuntu, which help you to

download and install programs with just a few clicks.

- In fact most people may take up to a week or so get used to using Linux.- Linux needs more technical ability: a new Linux user must be trained really well

really well to enable them handle the systems well. Alternately, one can hire

someone who has experience with Linux.- A good Linux administrator needs to be on hand as you start to migrate your

systems over. This is a disadvantage financially, at least in the beginning as the it will

need training to those who will be running it.

Future trends in Linux.


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- Demand for Runtime Power Management: Linux needs to be ready for the standalone computer devices with the number of notebooks being sold increasing super

proportionally these calls for managing their power consumption so that they run

for long amounts of time with the existing, limited energy sources.

- One different aspect of power management is that it reduces the amount of heatbeing generated, prolonging the life cycle of devices, allowing for passive (fan-less)

cooling and thus causing less noise. Therefore, power management largely improves

the technical usability of devices.

- Linux taking over UNIX: Linux continue to take market share from UNIX. This willlead to it fully owning the UNIX as after taking over the shares it will totally out

shadow UNIX. Linux will also grab market share from Windows with the increased

usage by large firms especially the banking sector.

- Overtaking windows in the market share: this has come at a point where manyLarge Enterprise planning to deploy more Linux servers than Windows servers in the

next year and even more in the next 5 years. This will make it more spread out

hence many users will opt to try it with the continued campaign.

- Features, technical superiority, security and quality are the major drivers of adoptionand not lower cost or better TCO anymore.

- Customer satisfaction is quite high.- Cloud infrastructures: Linux has been very dominant for new developments and

deployments on Cloud infrastructures and the brand new Greenfield environment,

which is the future. This is a major advantage for Linux over the other operating

systems.

Conclusion.

-

Linux has been in use now for more than ten years, and in recent years, it hascaptured the interest and recognition of businesses as a robust and viable operating

environment for many applications.

- Linux introduction and usage in banking systems has led to a very positive tread inthe solving of problems which faced the bank. An example is enabling the banks to


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migrate to Linux cheaply with no major costs incurred. This has encouraged various

other financial institutions to follow suit.

- Linux has made it possible for customers to heavily trust the banks to its high endsafety that it offers hence the users can have peace of mind on the data stored in

Linux run machines.

- Linux has helped many banks save on hardware upgrading as Linux can work on theavailable hardwares this makes banks maximize on service delivery while

minimizing on expenses.

REFERENCES:

1. marcomnext.wordpress.com/2010/10/14/the-...is-bright-for-Linux/2. Patterns for e-business. A Strategy For Reuse, by Jonathan Adams, Srinivaskoushik, Gura

Vasudera, George Gal ambos, IBM press, 2001,USBN 1931182027.

3. NETWORKING COMPUTING FRAMEWORK COMPONENT GUIDE, SG24-2119.4. LINUX NETWORK BY TERRY DAWSON.5. COMPUTER WORLD BY PATRICK THIBODEAUS-IBMS newest mainframe is all Linux.6. LINUX AND BRANCH BANKING BY BART JACOB, DAVID JANSON, OLIVER MARK, FABIO

LMAN

7.

http:/www.redhat.com/resourcelibrary/casestudies/bank ofnewzealand_reduces_carbon_footprint_with_redhat_on_the_mainframe(accessed at

9;38 am 11/04/2013)

8. http:/www.suse.com/solutions/industry.html9. features.techworld.com/operatingsystems/3232086/ten_reosons_to_use_linux_over_w

indows (accessed 6.36pm 11/04/2013)

10.http:/www.novell.com/docrep/2013/05/halkbank_turkey_success_story_ee.pdf11.

Schleicher Sarah(2007-02-05) using ATMabroad_Travel.TravelTips-msnbn.com.msnbc

12.IBM SOFTWARE-GENERAL-http:/www.ibm.com/software/13.IBM SOFTWARE-LINUX -http:/www.ibm.com/software/linux14.IBM LINUX TECHNOLOGY CENTRE.- http:/oss.software.ibm.com/Linux/15.LOTUS DOMINO SOFTWAREhttp:/www.lotus.com/home.nsi/welcome/domino


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16.http:/www.atm.marketprice.com/brazilian_bank_look_to_linux_for_ATMS17.

Documents

Linux Usage in Banking Industries