The Handbook of Banking Technology

Preface ix

Chapter 1 Introduction 1

1.1 Banking and the Rise of Technology 1

1.2 The Challenges of Technology in Large Banks 3

1.3 Navigating This Book 4

1.4 References 7

Chapter 2 The History and Current State of Banking 8

2.1 A Brief History of Banking 8

2.2 Cash, Gold and Digital Money 11

2.3 Branch Centrism 14

2.4 Banking Consolidation 16

2.5 The Development of Modern Banking Products and Services 24

2.6 Developments in Banking Technology 33

2.7 The Challenges of Technology in Banking 39

2.8 New Banking Models 41

2.9 The Impact of the 2008 Banking Crisis 46

2.10 The Current State of Banking 50

2.11 Further Reading 55

2.12 References 56

Chapter 3 An Introduction to Banking Technology 67

3.1 Introduction 67

3.2 A Model of a Simple Bank 67

3.3 The Core Banking Platform 68

3.4 Database Architectures 72

3.5 Making Platforms Highly Available 80

3.6 Platform Architectures 85

3.7 Revisiting Our Simple Model of a Bank 91

3.8 Single Customer View 92

3.9 IBM CICS 95

3.10 Internet Banking 104

3.11 Customer Authentication 108

3.12 Remote Procedure Calls 113

3.13 Distributed Objects and CORBA 116

3.14 Services 117

3.15 Web Services 119

3.16 RESTful Web Services 123

3.17 Service-Oriented Architecture 125

3.18 An Updated Model of Our Bank 127

3.19 Application Processing 128

3.20 Microservices 129

3.21 Modern Databases 133

3.22 Data Analysis and Reporting 135

3.23 Further Reading 146

3.24 References 147

Chapter 4 Channels 149

4.1 Introduction 149

4.2 Branches 150

4.3 Branch Technology 152

4.4 Post 157

4.5 Automated Teller Machines 158

4.6 Telephony 168

4.7 Online Chat 169

4.8 Video Calling 169

4.9 Handling Telephone, Chat and Video Contacts 170

4.10 Text Messaging 194

4.11 Internet 195

4.12 Email 195

4.13 Mobile 196

4.14 Social Media 198

4.15 Marketing 198

4.16 Cross-channel Considerations and Implications 200

4.17 References 203

Chapter 5 Banking Operations 207

5.1 Contact Centre 207

5.2 Payment Operations 208

5.3 Cash Management 210

5.4 Credit Operations 210

5.5 Collections and Recoveries 213

5.6 Fraud Services 214

5.7 References 227

Chapter 6 Card Payments 230

6.1 Types of Card 230

6.2 Information on a Payment Card 232

6.3 How a Card Payment Works 233

6.4 Card Payment Networks 238

6.5 Other Types of Card Transactions 243

6.6 Managing Payment Cards 245

6.7 References 257

Chapter 7 Payments 259

7.1 Introduction 259

7.2 Cash 260

7.3 Cheques 262

7.4 Direct Credits 267

7.5 Clearing and Settlement 267

7.6 Interbank Payments 268

7.7 Payment Fraud and Sanctions 284

7.8 Payment Reconciliation 284

7.9 Payment Technology 286

7.10 References 294

Chapter 8 Regulation, Finance and Compliance 297

8.1 Introduction 297

8.2 Regulation 297

8.3 Global Standards 303

8.4 Working with (and within) Regulation 303

8.5 Finance Functions – Introduction 304

8.6 Finance 305

8.7 Treasury 307

8.8 Compliance 313

8.9 Human Resources 315

8.10 Procurement 317

8.11 Other Corporate Functions 317

8.12 References 318

Chapter 9 The Technology Function 321

9.1 Organisation and Governance 321

9.2 Conway’s Law 325

9.3 Cost of Technology 326

9.4 Working with the Business – It’s about the Service, Not the Technology 327

9.5 Service Management 329

9.6 Mapping Services to Applications 331

9.7 Governing the Application Estate 332

9.8 Insourcing and Outsourcing 334

9.9 Managing the Estate 337

9.10 Following the Rules – Regulation, Law and Technology 343

9.11 References 346

Chapter 10 The Future of Banking 348

10.1 Broad Trends 348

10.2 Changing Products, Features and Functions 352

10.3 The Future of Payments 352

10.4 Technology in Operations 354

10.5 Regulation 355

10.6 Finance 355

10.7 The Technology Function 356

10.8 A Short Digression on Data 356

10.9 Banking Products and Services 357

10.10 Distributed Ledger Technologies and Cryptocurrencies 359

10.11 The Future of the Branch 360

10.12 Headcount, Skills and Career Progression in the Bank of the Future 361

10.13 References 362

About the Authors 365

Index 367