Kookmin Bank decided to introduce the cloud rather than maintaining the ‘mainframe’, the main computer system it had been using for 30 years. KB Financial Group Chairman Yoon Jong-gyu is giving a lecture on digital strategy at Kookmin Bank’s new building in Yeouido, Seoul in May. Provided by KB Financial Group
The ‘mainframe’, the main computer system of banks that handled transactions such as deposits and loans, is expected to disappear into history. Kookmin Bank, which remained until the end, decided to abandon the mainframe and move banking operations such as deposits and loans to the cloud mainly used by big tech (large information technology companies). Analysts believe that the existing system, which takes 3 to 6 months to introduce a new service to a bank app, was not able to survive in the financial platform competition with Big Tech.
According to the financial industry on the 4th, Tech Group, the technology division of Kookmin Bank, has decided to give up the existing IBM mainframe. To this end, we started a practical review on how to convert ‘core banking’ tasks such as deposits and loans to the cloud and the specific introduction period. First of all, as soon as New Star Banking is released in October, we plan to conduct an internal test to change the main computer system to x86 server and Linux.
Both the x86 server and the Linux operating system (OS) are analyzed as the basis for the introduction of the cloud, where apps can be updated in real time and new services can be added. Mainframes specialized in processing large volumes in a separate space inside a bank are excellent in security and stability, but many criticize that they are not suitable for financial platforms that need to focus on users, such as blocking logins to improve apps. For this reason, other commercial banks abandoned the mainframe and switched to the Unix system. Kookmin Bank’s strategy is not to switch to the Unix system, but to immediately switch to the cloud using Linux OS. “A fast platform wins the game”
Banks shifting to app server cloud “If one function stops in the app, all logins are blocked. It’s not a good fit for a bank that dreams of a 30 million platform.”
At the beginning of the year, Kookmin Bank placed developers in front of business departments. It is an ‘agile organization’ where less than 10 business planners and developers work together. It is an organization commonly equipped with fintechs that aim for financial platforms such as Toss and Kakao Pay. Kookmin Bank also felt limited in the existing organization, where the information technology (IT) headquarters and the business headquarters were divided, and consultation between the headquarters was required every time a font was changed in the app. With an agile organization, all issues related to app functions within a team can be resolved without consultation between headquarters or approval from executives. The purpose was to end the situation where even simple service improvement work could not be carried out on its own. “There is a limit to apps that stop at 12 o’clock at night,” but computation is holding back. The internal judgment is that IBM mainframes, which are centralized servers, are not supporting an agile organization. Now, the explanation is that even changing one font in Kookmin Bank’s Star Banking app should block all mobile banking logins. This is the reason why the entire service is temporarily suspended because the banking app says that it does computer work around 12:00 every night. When an app crashes, you have to stop the entire app and fix the code. For example, if there is a problem with the ‘collect change’ function, which collects changes under 1,000 won, the entire Star Banking app must be stopped. A Kookmin Bank official said, “Agile teams should be able to independently make decisions and improve apps and solve problems without blocking logins. “He said. Kookmin Bank plans to move to the cloud as soon as ‘New Star Banking’, a new mobile banking app, is released in October, so that the app functions can be changed in real time.
Since 30 years have passed since its introduction, the fact that the programming language used in the mainframe is ‘COBOL’, which is rarely used by developers who can handle it now is also one of the reasons for converting the main computer system to the cloud/Linux system. Kookmin Bank explains that it will break away from the practice of outsourcing in the name of ‘project’ every time. It is paying 9 billion won to IBM Korea every month for mainframe maintenance and repair.
If you use Kakao and Tossbank Linux, which uses only Linux, the price difference is about eight times compared to using the mainframe. It is estimated that Kakao Bank saved about 100 billion won in cost compared to using Unix, which is adopted by most banks, by loading all apps as well as customer-related information on Linux and the cloud. Toss Bank also introduced Linux to all ‘core banking’ tasks such as deposits and loans. This is the reason why Kookmin Bank is going directly to Linux system beyond Unix.
Shinhan Bank (2006), Nonghyup Bank, Hana Bank (2009), Woori Bank (2018), etc., abandoned mainframes and adopted Unix-style servers. Shinhan Bank has gone one step further and has been trying to convert the mobile banking app ‘SOL’ to Linux since last year. Hana Bank uploaded GLN, a payment and settlement app that can be used abroad, on KT’s public cloud, ‘KT Cloud’. Jeju Bank, a subsidiary of Shinhan Financial Group, also decided to give up the mainframe for the first time in 25 years and introduce Linux to all business like Kakao Bank.
The mainframe has been regarded as a taboo word for KB Financial Group. This is because of the ‘KB Situation’, in which the then-holding chairman and the bank president at the time had a conflict over a plan to switch the mainframe to Unix in 2014. An official from Kookmin Bank said, “In a situation where we are competing with Big Tech on financial platforms, we can no longer guarantee survival with existing mainframes. ” explained.
Reporter Park Jin-woo jwp@hankyung.com
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