Zuger Kantonationalbank Enters the Internet Age

Despite industry debate about E-commerce, the question today is "when," not "if," the Internet will extend a company's service offerings. This highly successful Swiss cantonal bank is taking a cautious approach, getting its infrastructure in check before taking the big step into full-service Web financial applications. And Information Builders'Enterprise Data Access (EDA*) middleware is helping Zuger build sturdy foundations for an exciting new era of applications. Switzerland has 26 Cantons. Zug, although one of the smallest, is also one of the wealthiest because of the large number of corporations attracted by its low corporate taxes – one-half less than the other Swiss cantons.

Zuger Kantonalbank, primarily a retail bank, is the official bank of the canton. Its services are geared for all types of small- and medium-sized companies across a broad range of industries. With 400 employees and a balance sheet total of 7.5 billion Swiss francs in 1997, Zuger is small compared with the newly created Swiss bank, the United Bank of Switzerland. However, backed by the canton, it is an independent and innovative institution with 16 branches, and holds 60 percent of the canton's mortgage business.

In 1997 Zuger Kantonalbank entered the Internet age with its first Web-based bank account consulting application. The EDA middleware lets clients access live host data directly from their Web browser, and will ultimately provide access to a new generation of client/server and Web-driven applications as the bank develops its E-commerce activities.

Small in Size, Big on Technology

For a company its size, information technology plays a predominant role at Zuger. There are 60 IT staff, 24 of whom are software developers. This high ratio means that the bank is technology-focused and prepared for any opportunities that will improve services to customers. Wilfried Zimmer is originally from Munich, Germany, where he studied mathematics. With extensive experience in DBMS positions in German and Swiss companies, he is now a section leader for Information Engineering at the Bank.

Zimmer explains that management has already outsourced its mainframe activity in partnership with eight other cantonal banks. As is true of many companies that outsource such activities, Zuger maintains its application software development and IT management in-house.

Maintained externally is an IBM 9021/982 with 403 MIPS, partitioned into a test and production environment, and running under MVS/ESA with CICS and IMS databases. Internally, the bank uses some 350 PCs networked through an IBM/390 out to the mainframe in its external location.

Enthusiastic, Innovative and Savvy

The Zuger Kantonalbank is recognized for its innovation. "Small but smart," explains Zimmer. Zuger prides itself on being independent, with short decision lines and a reputation for creativity, exemplified by the extensive arts programs it sponsors, which are regularly updated on the Bank's web site.

Zuger has also pioneered new service environments such as the "tellerless" branch, which boasts a high degree of automation yet still maintains a small reserve staff just in case human interaction or consultation is needed.

Recognizing the potential of Internet banking early on, Zuger met with another pioneer in this area in the U.S. Zuger points out that during the initial discussions, management was enthusiastic about the possibility of starting an Internet banking service. "And we have very modern, pragmatic marketing people," he adds.

Another determining factor was that an Internet service would be good for the Bank's image, positioning Zuger as a dynamic organization – one in touch with today's world. Following the decision in February 1997 to move forward, the Zuger Kantonalbank Web site (www.zugerkb.ch) was up and running in just eight weeks. Today its clients access account information online. "We were the second bank in Switzerland to set up an Internet service," says Zimmer, "but the first cantonal bank."

EDA Forms the Backbone

Zuger was an early user of EDA on the mainframe and in the server environment. The bank discovered EDA two years ago when Zimmer was given the go-ahead to look for a host integration solution, working on the mainframe with CICS, IMS/DB and COBOL.

Having conducted extensive studies and concept work for this next generation of applications, the bank decided to standardize on a Windows NT approach with Microsoft SQL Server, building applications with PowerBuilder. Customers need to work with real data, "so we looked for middleware – secure middleware. That's when we found EDA," says Zimmer.

According to Zimmer, Information Builders' solution offered many advantages. The software is easy to learn, requiring no formal training. EDA is able to interact with IMS data from the mainframe, and can use the Bank's internally developed application modules to interact with the database. With EDA on the mainframe the Bank can work with EDA's stored procedures directly with the database. It's also no problem to interact with a home-grown application such as updating the status of the client's guarantee with the bank.

Access to CICS Data

For new Internet and client/server applications the Bank wanted to go with TCP/ IP instead of being restricted to the old LU 6.2 transport protocols. In seeking an overall solution for all transactions (including future Web transactions) in a client/server environment, the bank became one of the first users to implement EDA/TP Gateway.

Launched by Information Builders in Fall 1997, EDA/TP is a high-performance link from client/server or Web-based applications to existing CICS or IMS/TM transaction processing environments. The EDA TP/Gateway was brought into the systems infrastructure to offer access to CICS transactional data on the outsourced mainframe. Thus EDA/TP can enable Web-based applications with the same high-speed access and re-use of important business functions found in IBM transaction processing environments.

A Web Success Story

Live since September 1997, the Web site has proven to be very popular with Bank clients. "Many young people are using the Internet, and the Bank also uses it as a showcase for the myriad of activities it sponsors – including youth events for children, and training."

When Zuger began the service it offered its customers an Internet banking package, requiring users to sign a contract; today the Bank boasts more than 1,500 clients. A regular customer of the new service said, "This Web facility is just what the doctor ordered. I can obtain up-to-date bank information without leaving my living room."

"With our Web site we can provide more information and 'real time' for our clients, and offer a direct, low-cost way to deliver it," says Zimmer. "Of course we have had the usual questions about security on the Web but we have implemented two firewalls to put in front of our network, and have thoroughly tested this. We feel very safe with our solution."

The Zuger Kantonalbank is taking a step-by-step approach in making account information available to its clients. Unlike a major local competitor who has transferred a full-service videotext model to the Internet, Zuger is being cautious by offering account consultation only as the first step. The next step will be to provide information for owners of securities. After that will come the ease of moving from one account to another within the bank. In the meantime, Zimmer's team is working on a secure transaction concept for the Internet, the three major issues being security, synchronization and availability (uptime).

Growing Into the Internet

"Setting up a full-service banking business on the Internet can be a very expensive job," says Zimmer. He cites investments of up to five million Swiss francs for another bank's videotext solution, which has been copied to an Internet environment. "Our plan is to take the time to grow into Internet services at the same pace as our clients. We need to know their requirements and how ready they are for this so we can grow with this technology together."

EDA Offers a Global Solution

The account status application is now operational and the Bank is moving ahead with its plan to evolve to financial transactions that are secure and robust. Information Builders software is an essential component in this process.

"The EDA infrastructure is a useful tool for developers, and offers many advantages for IT people. This software is very good – it's quick to install and easy to learn without a lot of manuals." explains Zimmer.

On a global level the bank wants to perform all transactions in a client/server environment. "EDA TP/Gateway will give us a global solution," says Zimmer. "Information Builders' middleware will help the Bank move ahead faster and be more innovative for clients," he says.

(*Note: EDA is now part of iWay Software's product suite)