Although Raiffeisen Bank International AG (RBI) seamlessly operates in 12 Central and Eastern European countries, its applications often had trouble crossing borders.
Business and IT executives used to reflexively shake their heads “no” at the idea of taking a banking app used in one country and deploying it in another. That’s because the process of integrating the backend systems from a new country with an existing app wasn’t always worth the expense and time.
“We realized that integration was painful, hard, cost lots of money, and took too much time,” said Thomas Joham, delivery manager of the bank’s Realtime Integration Center of Excellence (RICE).
But over the past three years, Thomas and his team have completely turned that idea on its head. RICE has used standardized application programming interfaces (API), which enables two or more computer programs to communicate with each other, to transform the way the bank operates.
“People often think that standardization will limit innovation,” he says. “We proved that standardization can actually promote innovation if it’s done in the right way.” Indeed, in September, RICE was named “Innovator of the Year,” at the Kong Summit 2022 conference.
RBI was pushed ahead not only by an unexpected development that caused many companies to rethink their technology approach: COVID-19, but also through a relentless drive to delight RBI’s customers.
The Problem of Missing Group Standards
RICE was part of an IT transformation that RBI began as the pandemic took hold.
RBI found that every one of its banks, besides the missing group integration standard, had a different tech stack and a different IT architecture as well as outdated technology instead of modern integration capabilities. As a result, the individual banks were accustomed to developing their own applications where the interfaces were –in some cases – tightly coupled with the backend systems.
This led to all sorts of problems. “When you grow and get bigger, tightly coupled applications and old technology are hard to deal with because you basically can’t change anything without impacting a lot of things,” Thomas Joham said.
On top of this, the approach of missing group standards became more and more inefficient. “If everyone is building their own API, for the same thing, there is a high chance for a significant overlap. This means additional work everyone is doing,” he said. “If you use an API and add one field to an existing specification, it’s much cheaper and quicker.”
Starting 2019, Joham says “we worked closely with Hitachi Vantara to define the product-as-as-service approach with our business.” In consultation with Hitachi Vantara, RBI’s business convinced RBI executives in one network bank to let his team and RBI consult on the integration with standard APIs of a new regional mobile banking app which replaced the antiquated mobile banking app. Security, as well as older technology used in the existing application, were growing concerns.
Joham’s team began by performing a complete architecture analysis. The existing mobile app was built on top of technology that was not the latest and greatest, such as Simple Object Access Protocol (SOAP), a lightweight protocol used to create web apps that was released in 2007. A gap list was developed of all the ways the network bank region’s technology didn’t match a modern reactive mobile banking system.
“Because we couldn’t start from scratch, or replace all the systems they needed, we took a more gradual approach and introduced micro services architecture,” Joham says. “We proved we could decompose the legacy system with relatively little effort and find ways to provide these modern interfaces without changing the whole backend system.”
Cashing In on the Speed of APIs
The success of the integration efforts in the respective network unit, which was developed in a brisk nine months, led to the creation of RICE.
RICE’s first project was developing APIs based on the latest standards so that each country could open up their data domains for accounts, customers, and payments for use in various applications. When the project was completed in less than a year, people throughout the bank were sold on an approach using standardized APIs.
The center helped the 12 network banks each to deliver 20 group wide standardized APIs, based on real business demand, within the first year. “Using APIs is not the new part of what we did,” Joham explains. “The new part was using APIs to achieve reuse of application components and modernize the architecture, and all network banks delivered on it!”
RICE, part of RBI’s department of enterprise architecture, takes a uniquely wide-ranging approach to manage integration services and APIs. “When we go to conferences, we find we are the only enterprise architecture team that is bringing the integration architecture to life by practically helping to integrate,” he says. “We basically provide hands-on, end-to-end support from developing the integration concept to running the group wide integration solution.”Because of this, the RICE team is diverse. It includes infrastructure architects, software developers, operations specialists, and security experts. Right now, 30% of the APIs that RICE has developed are being used in more than one product. The goal is to bring that number up to 90% by 2025.
With the new approach, bank executives are happy that apps can be developed more quickly. Customers are happy with the modern features. And IT talent is noticing that the banking industry can be as innovative as the hottest tech startup.
“We showed that banking is actually an awesome place for IT people to work,” Joham says. “It’s sexy because of the cool stuff we do. A modern architecture and integration are key capabilities every company will need in the future.”
Joe Mullich is a freelance writer based in Los Angeles, Calif.