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Digital Integration HubsPower Transformation on IBM Z

Digital Shift in Financial Services UnderwayPre-Digital Transformation vs. PostRegulatory Pressures Increasing regulations Changes in regulations Personnel shortages Non-common data standardsCompetitive Pressures Non-traditional FIs Customer experienceexpectations Digital Interaction & Socialmedia driven complaintsSystems of RecordProfitability Pressures More inspection ofmarketing budgets Limited insights acrossentire organization(cross product, crossregion )Business Operations Risk Transformation Disruption Agility to implement newbusiness models Flexibility to leverage newtechnologies SkillsHow best to accelerate the digital shift profitably and securely? 2020 IBM Corporation 2

Digital Transformation ImplicationsTARGET STATE VISIONOMNI-CHANNEL OPERATIONSInternetMobileIoTATMInternal IntegrationHyper Modular architectureModularize core effectivelySelf-contained, micro-servicesprinciple, but still able to meetnon-functional requirements ofperformance, availability, etc.while preserving transactionalconsistency and coherencywhere needed, adding agilityvia microservices interfacesand hybrid cloudIndustry aligned referencearchitecturesguide the decomposition ofbusiness functions,ensuring hyper modularity.Accelerate integrationDISTRIBUTION & PRODUCT tomerManagementEcosysetm PartnersInsights: Real-Time & Pervasivereinvent core systems with afully secure and highly resilientmodern technology platform forplug-and-play capabilities.Transform & avoid negativedisruptionby ensuring operationscontinue to meet requiredlevels of performance,security and availability acrosscore systemsOpen architecture principlesBranchTARGET STATEREQUIREMENTSInternal IntegrationSYSTEMS OF RECORD / able agile and simplifiedinformation flow betweencore systems & hybrid cloud 2020 IBM Corporation 3

Need for Flexible Information FlowFaster cloud applicationdevelopmentComponents in Hybrid Clouds of ChoiceAgility of applications toleverage event drivenapproachAccess ormove rawdataAbility to get informationfrom multipleenvironments as needed Computation engine &efficient memory storeComputed InformationDecoupled from data contextInformation:computed / derivedfrom dataMeet data currency andconsistency needsSeparately auditable andgoverned instancesAPIs for transactionalinteractionDigital Integration HubDecouple from core datacontexts Subset of raw data & events Multiple data sourcesData Access, e.g.via DataVirtualizationCore Transactional & Batch ApplicationsACHMember ExistingReportingApplications ModelTrainingprocesses ArchivingExisting ETL/ ELTprocesses& toolsWarehouses, DataRaw Transaction / core systems dataTXNSApplicationsthat requireaccess to fullscope of rawdata, e.g.CardLakes, Other Full Copiesof Raw Data

Z Digital Integration Hub with Systems of RecordCreate a flexible, efficient information flow between multiple existing systems of record and cloud environmentsØ Provide information flow — not raw data access — betweenSystems of Record (SoR) and cloud environments with scale,high throughput and low latency requirements while alsominimizing impact to transactional systemsØ Leverage event mediation & aggregation for increasedefficiency of cloud applications’ interaction with SoRFaster ROI for Cloud ution and CustomerManagementIntegration: API management & Event Based ProtocolsSystems of RecordTransactionsTreasuryAccounts Better agility to expand ecosystems& create new channelsEcosystem PartnersIntegration & API managementZ Digital Integration Hub LoansLedgerIn-memory db withData Virtualization forZOptimizationEventsØ Mitigate unpredictable workload characteristics fromexpanding digital channel servicesInternetIntegrationØ Abstract & decouple SoR transactional data formats & datastore specifics from consuming applications allowing forgreater flexibilityOmni-channel OperationsInsights: Real-Time & PervasiveØ Reduce complexity of joining, aggregating, and computinginformation from multiple SoRsDigital Integration Hub ArchitectureLeverage high-value investments5

Z Digital Integration Hub Technical Detailsq Multiple Context specific inmemory instances of informationrelevant for use throughout theenterprise (not raw data)OMNI-CHANNEL OPERATIONSInternetMobileIoTATMBranchInternal Integration: Microserivces based API Management leveraging API Connect, MuleSoft, Apigee q Modern, prevalent interfacesusable across hybridenvironmentsDISTRIBUTION & PRODUCT SERVICESalesServicingProduct MgmtCustomer MgmtInternal Integration: Enterprise Service Bus Microserivces based API Management leveraging API Connect, MuleSoft, Apigee z/OSCore Interfaces or via RESTInterface Options: REST, JDBC, EVENTZ Digital Integration HubSYSTEMS OF RECORDTransactionsProductsGeneralLedgerCustomerTxn activity by client,product GridGain:On-boarding realtime inquiriesGridGain:Compliance data &aggregationsGridGain:IBM Data Virtualization Manager Rocket Industry Data TemplatesTXNSØØØACHMemberCardWarehousesData lakesTransaction and related data incumbency with systems of record – efficient and performant integrationLeverage & build upon client investments in mission critical core applications to deliver business valuePersistence of in-memory instances to Db2 z/OS, unparalleled DR via integration with GDPS for cross-site replicationEcosystemsInsightsMarketingq Technology driven via in-memorydb (GridGain for z/OS) combinedwith data virtualization /abstractionq Incremental, Non-disruptiveapproach to introducing newproducts, features and extendingto hybrid cloud ecosystemsq Can customize offering withindustry specific content, forexample compliance /riskq Integrate cloud capabilitiesquickly66

Z Digital Integration Hubs for Providing Wholistic View of CustomerToday’s Landscape Why? Cross Organizational View of ClientManual processes link client assets acrossenterpriseLack real-time view of position, risk, growthFragmented systems, dataSiloed applicationsLatency & loss of granularityCustomer ACustomer BCustomer CAsset Management WealthAssetCommercial Banking Real EstateLarge Corp.Financial InstitutionsCorporate Banking Potential benefits Customer acquisition, retentionMultiple, integrated views of customeroAccount viewoFamily viewoPortfolio viewCross & Up-sell opportunitiesTradingLoansCreditConsumer Banking Core BankingCredit ommercialBankingAssetManagement7

Z Digital Integration Hub to Accelerate RegTech / FinTech Ecosystem Partnerships Number of regulationsChanges in regulationsPersonnel shortagesNon-common data standardsInteraction Validate formatsandcompleteness ofinfo forderivatives, CC,FX, loans Z Digital IntegrationHub Bank surfacesaggregated,computedinformationIncreasing costsfor BanksRetailInvestmentTreasurySharing costs of compliance, responding to increasing granularity of regulations, reducing riskthrough limiting raw data exposureFinTech / RegTech: Identify most currentregulations, changes,pending changes, etc. Provide pre-filingvalidation specific tothe FI using newtechnologies8

Z Digital Integration Hub to Share Core Systems InformationToday StateSystems of Record z/OSCore Systems:Core BankingACH ProcessingWiresSystems of RecordDesired StatePeriodicBulktransferof largevolumeraw dataData: VSAM, Db2, IMS, PS Core Systems:Core BankingACH ProcessingWires z/OSZ DigitalIntegrationHubData: VSAM, Db2, IMS, PS Eventdriven realtime,computedinformation 25informationelementsOther data ces Other data ces The payment decisioning applicationleverages various data for decisioning,including data from multiple coresystems of record (SoR)Data transferred periodically and informats specific to SoR applicationsAs a result, payment decisioningapplication may not have currentinformation (e.g. on accountbalances) and requires applicationdependencies on data formatsThis can lead to increased complianceStreamingrisk & reducedagility for change.The Z Digital Integration Hubcontinually consumes transactionsfrom core & blends overnight batchOnly selected, relevant information iscomputed, results streamed via KafkaPayment decisioning application hascontinual, current account balancesand other relevant accountinformation to use during decisioningResults: reduced risk window due tocurrent information & decoupleddependency from specific datadelivering more agility

Z Digital Integration Hub as Part of Progressive ModernizationToday’s Landscape Core Systems ModernizationCloudApplicationsREST based Microservices or Event DrivenModularize & Modernize CoreSystemsTXNSLoansCustomerMgmtDDAModularize & ModernizeFinancial SystemsZ any enterprise clients are modernizing core,but doing so progressively to mitigate risksA number of core applications have not beenmodified in 20 years or more, leading to complexand long modernization journeysParallel Paths to Modernization LiquidityModularize core applications, introduce APIs forinteraction and re-write as possibleModernize DevOps processes and tool chainsIntroduce agile and simplified information flowbetween core systems & hybrid cloudPotential BenefitsTransactionsMember Info Facilitates the co-existence & interchangebetween components deployed in hybrid cloudand existing applications Does not first require application or datarestructure, leading to faster ROIPayments

Additional Client Use Cases Enable aggregated, select blending of batch processing results with intra-day core transaction processing,identifying a small subset of results to flow to applications residing in hybrid cloud (e.g. risk applications,marketing/sales, product servicing, etc.) Satisfy channel application needs for specific information (“data” at the edge) with more agility, reduced rawdata exposure & flexibility of deployment for wide array of application components Value: Integration of blended real-time information from z/OS Systems of Record with cloud applicationsboth on-prem and in the public cloudValue: Increase rate and pace of channel application deployments in the cloud, abstract theseapplications from the details of System of Record raw-data context, and do not overwhelm coretransactional systems with unpredictable information requestsPre-populate computed / aggregated Systems of Record information for flexible use by ecosystem partners withseparate auditing and governance based on use case, partner, etc. Value: Enable fast, agile interaction with ecosystem partners in areas of omni-channel, compliance,product pricing, etc. while preserving security, performance and availability of core systems11

IBM Z Digital CoreWhy Z Digital Integration Hub on z/OSCost AdvantagesCurrency of InformationData Security & GovernanceCost advantages delivered via: highly zIIPeligible technology components, flexibility todrive information flow APIs or transactionalAPIs as appropriate for use case, and limitinglow-value I/bO costs of moving bulk raw dataoff-platform during operationsInformation derived from current and valuable datais tightly integrated with unique z/OS capabilitiesproviding real business value and better customerexperienceSecurity starts with identifying what informationneeds to be shared: compute, aggregate, joindata on highly secure platform, leveraging itsexisting auditing and governance, rather thanexposing all raw dataScalabilityUnparalleled Disaster RecoveryIntegration with CoreScalability and Performance are delivered via:transaction and data incumbency on z/OS,event aggregation at the source, and memoryto memory techniques between data sourcesand digital integration hubPersistence of in-memory digital integration hubinstances to Db2 z/OS provides unparalleled DisasterRecovery via integration with GDPS for cross-sitereplicationFlexibility to additionally leverage information indigital integration hub from existing coreoperations on z/OS leveraging highly optimizedinterfaces12Tightly integrate digital integration hub with core systems of record for efficient, flexible, andsecure digital transformation

Compliance data & aggregations IBM Data Virtualization Manager Rocket IndustryData Templates 6 qMultipleContext specific in-memory instances of information relevant for use throughout the enterprise (not raw data) qModer