"Even my 80-year-old mum knows she ought to ask for higher-yield deposits or guaranteed funds when she goes to the bank," said Michael Leung, senior VP and CIO, Information Systems Group, Bank of America (Asia). Leung explained that the increasing sophistication of both banking products and customer expectations was a positive trend, as well as a driver for Hong Kong banks to raise the overall level of their technology.

The overall compliance picture is driving higher adoption of IT among Hong Kong banks, according to Leung. "Legacy systems often cannot fulfill the requirements of Basel II, Sarbanes-Oxley or Anti-Money Laundering related guidelines," he said. "We can add capacity to the mainframe and 'bandage' the applications, but these compliance measures require the capture of more specific information. For example, if a loan went really bad in the past, we could simply write off the loan, turn it over to a collection agency and book whatever they could recover as income. Now, we have to capture data related to the principal, interest owed, amounts recovered and the source of repayment even though the payment is made years after."

Major computer surgery

This need for more data collection and more complex collation has driven Bank of America (Asia) to start working on a core banking system replacement opportunity, a process Leung likened to "open-heart surgery." The process really began with preliminary exploration and staff training about a year ago, and will likely take two additional years to complete, he said. "This not only involves the core system but many peripheral applications," said Leung, "including investment products, teller systems, online banking, ATMs and cards, data warehousing-all these are integrally connected to the core system."

Leung added that another hurdle was retraining his core banking team of 16 programmers, who were more comfortable with RPG (AS/400) coding than J2EE and NET. "You basically have to do a 'brain-dump' to get an RPG guy to switch over to Java," said Leung jovially. "Not only are we using new tools, but also a new development platform." The BofA CIO explained that the new system is Unix-based, with a front-end based on Windows and .NET, a back-end using EJB/J2EE and Unix middleware. Leung said that he considered deploying Linux, but "the available Linux system monitoring and management tools, in my opinion, are weak compared to their more mature Unix equivalents."