Data processing coming back to center

WEST PALM BEACH, Fla. - Data processing models are cyclical and it looks like the "00" decade may bring a move away from client/server to a more centralized model. "Historically if you look at the `70s, `80s and `90s, the beginning of each decade started with centralization. In the `70s there was the creation of the mainframe, multi-tasking came in the late `80s and then client server phases. The phase is now back to centralization," said John LoPreto, vice president of application services for credit union data processor C.U. Processing, Southfield, Mich. Centralization isn't going to mean large mainframes built up off the credit union's IT room floor. Today's powerful servers strung together can act "mainframish" and bring that centralized approach. The openness that some DP vendors are today touting as a differentiator from competitors will be the rule, not the exception, in the future, said LoPreto. "Plug and play has become such an overused phraseology, but it is truly going to have to be plug and play," said LoPreto, who noted that industry standards like XML and OFX are helping DP vendors get there (see chart on this page for standards definitions). Dereck Strate, manager of application technology for C.U. Processing said the move away from client/server back towards server side processing is driven by the Web. "All you need to get to the server today is a browser. That's really what's shifting us back to a centralized approach," said Strate. LoPreto said one byproduct of the move to centralized server side processing is increased emphasis on bandwidth. "Servers are more robust, but also the bandwidth is becoming more robust. 56K is going to be obsolete. You're seeing ISPs penalize companies for using 56K. Three to five years ago fiber optics were unbelievable, but now they're common." Strate said data processing is really trying to keep up with the American family's lifestyle. "People are typing to reclaim some of their family time. They don't want to leave home to bank. We're going to have to provide the convenience level by providing services at a distance," said Strate. Simply put, that means providing wider access and more access points to the data. That doesn't mean the data processors will be providing the Net banking and other remote solutions-they're going to have to provide the access for third-party vendors' solutions or credit unions will look elsewhere, said Strate. Dan Chavitage, architect of EDS' CUBE system, said centralization is coming fast. One of the reasons is the proliferation of handheld devices and other high-tech appliances that members can use to access their credit union. "The whole PC business is moving back to a centralized mainframe computer. I see CUBE as a pocket mainframe. Things right now make sense for a mainframe environment. People are swarming around with handheld PCs. Credit unions want open access, controllable access and auditable access. "How are we going to do all of it? By running a tight ship in the computer room, which basically means mainframe instead of an uncontrolled room of PCs," said Chavitage. Chavitage described the DP system of the future as a piece of taffy that will be stretched and pulled in many different directions as the credit union strives to provide members with more entry points to the system. "My responsibility is going to be to allow unbelievable kinds of access to data. You would think the Web is the great equalizer and would decentralize everything, but not from our perspective. It's like pulling taffy from every direction at once," said Chavitage, who said there has to be one primary centralized piece of taffy (or core system) for users to pull from. John Schooler, vice president of business development for credit union data processor USERS, Valley Forge, Pa., said DP vendors are also trying to deal with a growing credit union industry sales culture. "I'd say the theme we are faced with is moving from transactional processing management to relational management without slowing down. In the old days you met the member face-to-face. Members got in line with a check or withdrawal slip and we were very good about moving those transactions through the lines, but now we're hearing more about sales cultures." To do the cross selling credit unions are demanding, member data is required, and not only that, very specific analysis of that member data is required, said Schooler. "Almost a level of artificial intelligence to analyze data is needed. It puts heavier loads on the system because you're doing a lot more looking at data and thrashing through data. The structure of data processors' data has never been oriented to this. It's been for posting transactions quickly not supporting a sales culture." Schooler and others interviewed said there's a drive to present a single unified user interface at the teller line and member service desktops so that member information from all systems-whether they're on a back-office mortgage system, securities system on a separate PC or what have you-will be available without the user having to go to different systems, or even different windows. "All vendors are working on it in one stage or another. Our perspective is through using open systems concepts and standards. We can never build all the interfaces to all the back-end hosts," said Schooler, who said concepts like SQL, XML and OFX are the standards DP vendors will need. Chavitage said EDS is counting on the IFX standard, but until it is complete EDS plans on unveiling its own standard interface, known as CUBELEX. "OFX is good for Quicken type stuff, but you can't book a loan with OFX," said Chavitage. He said IFX can't help book a loan right now either, but down the line it should be able to. "It's still a few years off. We're pushing a head with a standard of our own-CUBELEX. We'll publish the standard and then the vendor can present a transaction in CUBELEX. It gives people in the computer room control of what kind of applications have access," said Chavitage. Chavitage said larger DP vendors will have an edge in the truly open environment of the future because they have the economies of scale to cut vendors the best deals. "Be open or dead. Niche vendors do things they're own way. DP vendors will be as open as possible." LoPreto said DP vendors won't build systems in the "00" decade like they did in the `70s. "Back in the `70s technology was used to build the system and the business had to learn what to do with it. Now the technology is used for the business' sake. The whole purpose is to meet the business' needs," said LoPreto. Schooler said with more members controlling their financial lives from their PCs real-time posting will be essential. "Credit card postings done in batches at the end of the day won't be good enough. We're going to have to implement the real-time connectivity," said Schooler. Schooler said it will take some large entities, like ATM networks, longer to convert to the standard. "They're happy with their ISO 8583 standard. You don't see them making a lot of moves to migrate to SQL. But even they will have to." -pgentile@cutimes.com