Enterprise Architecture in Financial Services


Recently I have attended many conferences (TechEd, Gartner and SAF) and a common thread keeps emerging. Enterprise Architecture (EA). There is quite a bit of interest in EA. Given my previous experience as an Enterprise Architect I am well versed in the challenges out there today. In my current role at Microsoft I am trying to keep on these topics as it relates to Banking, Insurance and Capital Markets. I am not going to bore you with the standard EA response and try to sell it. Rather I want to relate it to the financial vertical so there is a bit more substance to this.
I believe that financial services verticals are really the poster children for the need for EA. Here we have:

  • 30 plus years of cycled technology innovations - Banking systems have been around for a long time. So there are a bit of legacy or obsolete technology laying around. Over the years when new and exciting innovations in technology were released with the promise of solving the worlds IT problems financial services organizations adopted some of these technologies. However, new versions of those technologies were released and the risk adverse and cost conscious financial organizations left most of it around. Thus causing a chaotic and disjointed enterprise of technologies.
  • Risk adverse behavior - These organizations have to be risk aware and have the upmost concern for risk. They do have all of our money! With this behavior innovation and IT systems change comes very slowly and is usually a lengthy process. All the more reason to have EA.
  • Extreme scrutiny from the Regulatory Bodies - The federal governments around the world have put strong scrutiny on FI's. IT planning and process is critical. Again, this is another great reason to have EA present in these organizations.
  • High need for organization of IT assets - Without a handle on what you have how can you be secure? How can you avoid risk? Or even make effective decisions.
  • Auditing, Security, Data Management and Separation of Duties is at the upmost importance - With all of the above constraints around FI's these come into heavy play.

As many of you already know EA is comprised of many different aspects. So the conversations I am having with folks are all over the board. What I can tell you is that there are many people struggling with building the right EA orginization. Governance is one of the largest challenges.

Unfortunately, there is not a straight forward or easy answer for this problem. There are many forces at play here. There are three critical forces in Financial Services:

  • Regulatory - As mentioned above the regualtors are always watching FI's. It is key to have a standardized way of making technology decisions. EA can do this by providing the enterprise level of governance and technology standardization. Rather than making decisions at the team or line of business (LOB) level.
  • Operational - Like any business FI's are concerned with operational efficiency. This not only helps the bottom line but with the Mergers and Acquisition (M&A) climate in the US. Having a trim operation ratio is critical to pulling off a successful a M&A.
  • External and Competitive - Right now all over the world FI's are concerned more and more about competitive threats. They are striving to differentiate their products and services from there counter parts. Especially in areas of the world where banks are already consolidated. In these environments organic growth is key.

In today's inflexible business and subsequently IT environments the need for an agile enterprise is critical. So with all of the chaos in our own IT environments and the many choices out there to choose from varying from methodologies, frameworks, technologies and everything in between what is the right answer?

Well it's simple but the result is as complicated as you make it. You must you common sense when choosing these. Determine what is right for your business. Obviously figuring out what is right for your business might be a challenge but the key here is common sense. If you don't have some of these key questions answered you a lite and iterative approach to get started.

Your process (traditional, homegrown or formal EA process) should be iterative. The big bang process just doesn't work. The key here is that the process should set the right level of governance and procedure for your organization. I am bolding "your" because that is very important. Every organizations culture is different. You need to evaluate yours and determine what makes sense.
How much can my organization handle?

  • How long have the existing process been in place?
  • What is the level of tolerance for new process?
  • How mature is my IT organization
  • What is the relationship between IT and the Business?
  • Are we ready for EA?

These are just a small sampling of questions that you will need to go through with your IT and Business decision makers to come up with an educated decision for the right framework or methodology.

Skip to main content