Why banks love mainframes

Fiscal institutions rely on big iron, and the reasons have far less to do with tradition than they do with power and versatility

Why banks love mainframes

If you’ve been following this blog, you may have seen me mention mainframes are popular with banks and financial institutions. In reading that again and again, you may have thought to yourself, “So what?” After all, banks are notoriously hidebound and slow to adopt new ideas (there’s a reason Mary Poppins’ Mr. Banks worked for the bank of London and not a toymaker to represent being conservative and slow to change.)

And slow to change though the banks may be, what they most certainly are not is impractical. Banks don’t just love mainframes because that’s what they’ve always used. They love mainframes because they’re the right tool for the job: a tool with power.

Big iron provides the necessary processing power

Every bank uses a mainframe because only big iron provides the processing power to support the many functions banks need a computer to perform. Mainframes don’t just keep the bank’s records and crunch numbers. They support cloud and mobile transactions, monitor for signs of fraud, perform analytics in real time, and more—and all simultaneously. Banks love mainframes because only mainframes can provide for a bank’s every need without breaking a proverbial sweat: a single, unified, efficient solution to a host of different problems.

Mainframes have been around for more than 50 years, and though they predate mobile technology, they are perfect for supporting both mobile and cloud-based banking. When the banks first installed big iron, you had to physically walk into a branch to withdraw or deposit money.

Today, everything is different. Banks rely more and more on mobile and cloud-based interactions. People check their balance, make purchases and transfers, and deposit their checks online using their mobile devices and cloud technology.

For larger banks, this can mean thousands of transactions per second, uploaded remotely via mobile to the cloud to be processed and filed away by a mainframe. Without all that processing power, banks simply would not be able to reliably handle the volume of information they receive.

Big iron and big data were made for each other

Mainframes are so powerful that supporting a bank’s cloud and mobile needs is just part of what they can do. Only big iron has the muscle to run real-time data analysis and analytics on all transactions, providing these organizations with up-to-the-minute information about their customers’ changing needs, evolving trends in the marketplace, and the success or failure of new initiatives and ventures.

Big data and big iron were made for each other: By running on mainframes, financial institutions have easy access to the sort of analytics processing power for which other industries must contract outside consultants and analysts. So, not only do the banks reap the benefits of up-to-date analytics, but they can pass those savings along to customers.

Rapid-fire data analysis does more than just help the banks put their investors’ money to work. A mainframe’s ability to crunch data super-fast enables banks to catch and prevent fraud. Much of modern banking fraud relies upon processing delays. If the illicit transaction is not caught in time, the fraudster can get away free and clear. But mainframes scan for discrepancies so fast they can eliminate such delays, making it impossible for criminals to safely commit card-not-present fraud or other similar violations. It’s easy to pull a fast one on a person—not so much when you’re matching wits with a giant computer doing countless calculations per second to check if something is amiss.

As you can see, banks don’t just use mainframes because of some sense of tradition and brand loyalty—things that mean little in the hard-nosed world of finance. If bank executives thought they could maximize profits by switching to the abacus, the clicking of mainframe processors would be replaced tomorrow by the clacking of beads.

Mainframes alone have the sort of robust, reliable, and rapid processing power financial institutions need to do all major computing functions all in one place. That’s why big iron isn’t going away anytime soon. We need mainframes to count, process, and safeguard our money.

Copyright © 2016 IDG Communications, Inc.

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