A Case Study: The Restructuring of Japan’s Long Term Credit Bank

In the mayhem surrounding the economic problems in Japan in 1989, the Long Term Credit Bank (LTCB) underwent a surgical transformation. Ten years had passed since the economic downturn and the bank was still lurching from one problem to another. Many felt that the end was near. Finally, in 1998, the bank was sold to an international group and this group restructured and renamed the bank and that was how the Shinsei Bank was launched in the year 2000. LTCB’s IT infrastructure was mainframe-based and over the years, it had developed haphazardly with a number of different applications and systems supporting a number of card products that had only minor variations. The new owners were very keen to consolidate all of these into a single product, but they were very anxious that the customers of the bank did not face any further disruption to their work. While the bank could have closed all its competing cards and issued a common card to all customers, this was not an option because it would have caused a major service disruption. The path Shinsei followed was this – each of the card type was called a business and a new IT application was created to deal with each of these businesses. Over five years, the bank transferred each of these ‘businesses’ to a common platform and application. Existing customers were slowly moved to a common hardware and operating system without ever becoming aware of it. All mainframe and legacy systems were ported and the cloud had won yet again. A full bank was ported to the cloud in small steps, with no disruption to its already fragile customer base. Starting from this case study of the year 2000 and later, there have been thousands of such transformations. The cloud itself has evolved enormously over the years and become far more advanced and user friendly. In the second section of this article, we see how the cloud has changed over the years – In recent years, the public cloud has become far cheaper than what it would have cost Shinsei Bank. The difference in costs between public and private clouds has increased due to the economies of scale possible in the public cloud and this difference will increase. Security in the cloud has got a lot better and this is removing one of the major reasons to stay with a private cloud. Automatic patching and updating of cloud based systems is already making systems safer and reduces the window of opportunity available to hackers. Already experts are getting around the view that public clouds are in many cases far safer than private clouds or in-house IT setups. Cloud systems are becoming much more compliant of various regulations that govern computing practices. This is an evolving area and as technology evolves and our understanding of security and inter-operability requirements improves, compliance issues become better defined and cloud systems are improving in their compliance with standards. Look at digital signatures – for a long time, e-commerce was held back by the lack of reliable digital signatures. This has now changed and we take these for granted. Today you can even take out a bank loan with a digital signature. As the number of subscribers to the public cloud increases, they will drive progress in the development of compliance mechanisms. Enormous computing capability and practically unlimited storage is making compliance much easier than ever before. The low costs of cloud computing are making people develop applications privately. This is sometimes even called rogue IT. One of the best known examples is of Derek Gottfrid wanting to put all of the New York Times archives on-line. Instead of waiting for the Time’s IT set up to give him the equipment, he went ahead and set up a cloud instance and hosted the archives on it without the knowledge of the IT department. The archives came on line in a fraction of the time and the cost it would have taken otherwise. The path shown by the Shinsei Bank in the early part of this century is now taken by thousands of businesses regularly. Cloud computing is getting more cost effective and more robust with time.

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Our articles are written to provide you with tools and information to meet your IT and cloud solution needs. Join us on Facebook and Twitter.   About the Guest Author: Sanjay Srivastava has been active in computing infrastructure and has participated in major projects on cloud computing, networking, VoIP and in creation of applications running over distributed databases. Due to a military background, his focus has always been on stability and availability of infrastructure. Sanjay was the Director of Information Technology in a major enterprise and managed the transition from legacy software to fully networked operations using private cloud infrastructure. He now writes extensively on cloud computing and networking and is about to move to his farm in Central India where he plans to use cloud computing and modern technology to improve the lives of rural folk in India.