Mainframes and Financial Services: The Present and the Future

Mainframe critics still believe it to be an outdated and irrelevant technology in today’s business world. The reality is that the mainframe has consistently remained the heart of IT and the center of every technology strategy in the financial services sector. It’s nearly seven decades since the first mainframe computer was launched.

Since then, it has undergone tremendous changes and upgrades. Today, the mainframe processes close to $3 trillion daily in terms of commerce flows. Even though there are many alternatives, such as highly developed cloud technology, the financial service sector still holds the mainframe as its first choice.

Banks process millions of transactions daily

The financial sector is one of the sectors that process the highest number of transactions daily. Some large banks have a retail customer base of over 60 million and more than 4 million corporate customers. The customers interact with the bank’s backend through various types of front-end applications. Many of them visit the bank premises for multiple transactions.

Other banks and financial service companies make requests daily from different locations globally. The financial sector handles millions of transactions daily, both internally and externally. The mainframe was created to handle high volumes of transactions. It doesn’t experience latency or downtimes when handling large-scale transactions and can support millions of users per second. It does well by leveraging large bandwidth communications.

Due to their high capability in handling millions of transactions, the financial sector is in the lead of adopting mainframe modernization strategies. These are strategies that will enable it to handle hundreds of millions of transactions every minute. There are no signs that the financial sector will cease using mainframes anytime soon.

Mainframes have a high degree of availability

Customers in the financial sector have a wide range of options when choosing their preferred provider. They measure the reliability of a financial institution by the value of customer service provided. Being able to access the institution when needed and where needed is a critical factor. When a customer wants to check their balance on their phone, they don’t want to wait for half an hour to get feedback. If they go to the ATM to withdraw, they don’t want to see a tag reading out of service or the system is slow.

If such issues become consistent, a bank would lose customers because clients have unlimited options. An available system means it is ready 24/7 to process requests when needed. This ensures continuity in business and its processes. The modern mainframe is highly available and rarely experiences outages. Their redundancy level is maximized at 99.999%, which means its probability of experiencing an outage is only about 5.3 minutes annually.

Millions of customers may never realize there was an outage at all. Customers starting a new business are particularly sensitive with the bankers they choose. They want to be certain they will not experience challenges at a time when they need the banker most. Mainframe availability ensures the consistent provision of services 24/7 globally.

To make the mainframe availability better, its manufacturers today are using multisystem data-sharing technology.

This is a technology that permits the mainframe to directly access concurrent read/write data shared from all remotely located servers. This clustering technique does not affect data security or performance.

Integrating the mainframe with new assets

For many years, the financial sector has gone through multiple challenges. Fortunately, each challenge has resulted in innovations and fresh opportunities for the sector. When the first ATM was installed in 1967, there were no credit cards yet. However, this was the beginning of innovation, where customers performed more transactions away from the banking hall. Today, customers use hundreds of applications to connect with banks and perform transactions remotely.

To meet customer expectations and cut costs, the mainframe has remained the center of focus for the financial sector. Most front-end systems used by the sector today were not there when the mainframe was developed. Many of them were never there at the beginning of the 21st century. These are systems such as reporting, transaction, electronic banking, text recognition, document flow, and credit process management systems.

Although these systems are recent, they don’t present a challenge to the mainframe. The computer can effectively maintain legacy applications and run new ones, including new systems. Today’s mobile banking systems rely purely on new applications, and the mainframe is capable of adopting newer technologies and systems without affecting services.

It is not just applications and systems the mainframe is capable of handling. It can be upgraded with new hardware to support modern technologies, and its functionality will never be affected. The IT department doesn’t need to switch off the computer to upgrade it. The front-end users will never realize there was an upgrade.

Another advantage of the mainframe is speed. The machine is built for speed and can process millions of transactions per second. The mainframe will remain a preferred computer by the financial sector for many more years to come. The mainframe is a resilient and reliable computer. It records no errors when performing transactions.

Banks prefer the computer because it provides 100% accuracy. It is automated to use self-healing tools to rectify errors when they happen. As the financial sector networks get bigger and wider, sometimes it is not easy to diagnose where an error or problem is coming from. This is one of the reasons why the self-healing capabilities of the mainframe are crucial in the sector. Most of the time, it is only the IT sector that realizes there is a problem.

Concluding thoughts – Mainframe and the future

For about 70 years, the mainframe has undergone significant changes. It has evolved from a machine that could handle a few hundred transactions per day to over 30 billion transactions daily today. The current mainframe modernization strategies will upgrade the machine to handle more transactions daily.

It has proved to be a reliable and secure computer able to handle over 220 billion lines of code. More than 71% of the fortune 500 companies use mainframe computers. Although the mainframe handles about 68% of workloads, it is still one of the fastest computers ever. Due to these reasons, the mainframe will remain a preferred computer by the financial sector both currently and in the future.

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