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| BMO banking on IP |
May 2, 2005 |
By Paul Lima
A MAJOR FINANCIAL INSTITUTION BETS ITS NETWORK ON IP. DOES THAT MEAN INTERNET PROTOCOL HAS COME OF AGE?
There are already countless IP networks in businesses large and small. The Internet, itself an IP network, has powered an explosion of global data communications and, increasingly, voice communications.
However, when a major financial institution like the Bank of Montreal decides to replace its Frame Relay and Asynchronous Transfer Mode (ATM) data network with an IP virtual private network ( VPN), it’s a standout statement on just how much the reliability and security of IP has evolved.
In late January, BMO Financial Group announced it had signed a four-year $84-million contract with Bell Canada to implement a large-scale IP-based VPN. The IP VPN network will connect approximately 1,100 BMO branches and all BMO offices across the country. BMO Financial Group has total assets of $265 billion and more than 33,000 employees, and provides a broad range of retail banking, wealth management and investment banking products and solutions. So there is a great deal riding on the IP VPN rollout.
Of 872 large North American enterprises interviewed by Forrester Research, 82 per cent had completed a VPN deployment in 2004. This is up significantly from the 55 per cent that had completed VPN rollouts in 2003, said Robert Whiteley, a Forrester analyst in Cambridge, Mass.
The migration to VPN allows companies to abandon reliable but stagnant data networks such as Frame Relay, and embrace IP standards that enable IT departments to better manage networks and applications, and roll out advanced voice and multimedia applications. “The move to IP is a matter of when, not if, and how seamless can I make the transition for my customers and employees?” Whiteley said.
The migration to IP is part of evolving the customer experience, said Nimish Patel, vice-president of network services at BMO Financial Group. “BMO is committed to delivering an exceptional client experience by building long-term, meaningful relationships with our customers. To do this, we continue to invest in our infrastructure to ensure we have the best systems to develop new and innovative financial applications and services.”
Patel has no concerns about IP security or reliability. Customer service and security are “foremost in our mind,” he said, adding BMO and Bell are conducting “due diligence” around security. The IP network will, in fact, give BMO even greater security and reliability than the existing data network, he said.
networks. “We have a new division, Bell Security Solutions, that is entirely focused on
Isabelle Courville, president of Bell Enterprise Group, said Bell has worked with Cisco Systems to build robust security into its IP network and offer services that enhance the security of its customers’ internal IP IP network and intranet security.
It’s a good business for us,” she said.
When it comes to transitioning to IP networks, the retail and financial sectors, with branches or outlets and regional offices spread out across the country, are leading the way. Productivity improvements are the focus of the migration, as IP gives users a more uniform, and often browser-based, experience. Overall, migrating to an IP network can reduce the costs of managing and maintaining data connectivity by anywhere from 10 to 40 per cent, Courville said.
Her figures are confirmed by Whiteley.
“That’s in the range. Your mileage will vary depending on bandwidth and applications.
The greater the capacity of the network, the higher your savings will be.”
There are, she said, capital costs associated with rolling out an IP network, but running one IP network is less expensive than running parallel IP and Frame Relay networks, and is often done today to manage different types of traffic. Unlike Frame Relay, IP enables data, voice and video to run on one network, and makes it easier for an enterprise to roll out new applications across the network, manage data storage and security, and troubleshoot network problems from a central location. For example, disaster recovery storage solutions can be on online servers connected to the network, eliminating the need for tape back up.
FOCUS ON FUNCTION
Security and management aside, enhanced functionality through IP is really the key to the deal, Patel said. “This technology will contribute to our productivity goals by providing enhanced functionality to our employees, which will help them better serve our customers.” The IP network “is the enabler” that will facilitate improved productivity, customer service and customer relationships.
However, before new applications are brought on to the IP network, the VPN has to be rolled out across Canada, replacing the old data network, a transition that will take about two years. Initially, the migration will see one functional data network replaced by another. The bells and whistles come after the rollout is complete.
“This is not a quantum leap forward, but IP gives you a platform to apply innovations such as Vo IP and video streaming,” Whiteley said. While Frame Relay is a proven platform, there is no growth potential, as service providers have all but halted research, development and innovation in the older technology, he said.
Patel concurred. There is nothing inherently wrong with the bank’s Frame Relay network but “you don’t want to change when you have a burning platform.
That’s difficult to execute.” So the time to move was now, before BMO had to deal with Frame Relay fires. However, the decision to roll out an IP VPN was not an impulse purchase, Patel said. The decision was “in the works” for a year and a half, including the time it took to discuss the business value, source the vendor and plot a migration strategy. “It’s not just about technology.
We were looking at the business value we, and our customers, gain from this.”
Once the IP network is in place, new applications such as Vo IP, e-learning and improved customer relationship management, can follow, Courville said.
“But migration to IP is the first step leading to a new world of applications.”
Vo IP is often among the first applications added, as it promises to eliminate long distance tolls between offices or, in this case, branches across the country, Courville said. Although BMO has not yet committed to a Vo IP rollout, “Vo IP is definitely something we want to position ourselves for,” Patel said.
PROGRESSIVE ROLLOUT
Rather than rolling out the network and flipping a switch to turn it on, BMO and Bell have planned a migration strategy that will see the IP network grow branch by branch. Once the physical upgrade to a branch is complete, BMO staff will come in overnight and light up the site. “The branches and customers should see no change in functionality,” Patel said. BMO has taken this “refresh” approach in the past when upgrading technology or introducing new applications to minimize or eliminate service disruptions.
The implementation and management is a blended role between Bell and BMO. However, in the specifics “there is a clear demarcation of infrastructure, roles and responsibilities,” Patel said. Bell will manage the core network and BMO will manage the end points in BMO branches and offices. In addition, BMO will develop new applications.
Which means BMO is the face of the network and remains fully responsible for the new look — the IP banking look — its employees and customers will see.
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