Philippine bank creating distributed architecture; bank downsizes applications processing to Unix in plan for data distribution - Philippine National Bank - Global Software Experiences

Software Magazine, Sept, 1992 by Elizabeth U. Harding

Aiming for a premier position in the rapidly growing economy of the Pacific Rim, Philippine National Bank (PNB) is distributing the databases that make up its financial information system. Six years ago, under then-President Ferdinand Marcos, the government-owned company was targeted for liquidation.

In 1986, the government of newly elected President Corazon Aquino bailed out PNB -- with losses of more than $600 million -- by extending fresh equity and assuming nonperforming assets. In return, PNB President Edgardo Espiritu vowed to return the bank to profitability.

Entering the final stage of its privatization program, PNB expects to have majority private ownership following its next offering of stock. The 75-year-old company has become one of the largest financial institutions in Southeast Asia, posting a net income in 1991 of $161 million on revenue of $551.5 million. "We strengthened our systems," said Espiritu, who streamlined operations and adopted a software strategy to get the company out of the red. "We were six years behind in data processing and had a lot of catching up to do."

The Philippines is a country of contrasts: Impeccably dressed business people wend their way through city streets filled with noxious fumes and honking horns, while half-naked peasants toil in sugarcane fields. Life for the poor has been made more difficult by a series of recent natural disasters: a devastating earthquake, the eruption of Mount Pinatube, typhoons and flash floods. In response, PNB has set up a reconstruction loan facility for earthquake victims, a loan fund for the rehabilitation of towns hurt by the volcanic eruptions and a debt relief package for existing borrowers in afflicted areas.

PNB, headquartered in the capital city of Manila, jointly developed its loan tracking and processing system in 1989 and 1990 with Cinphil Data Systems, Inc., the Philippine licensing agent of Cincom Systems, Inc., Cincinnati. The bank chose Cincom's systems after evaluating database products from IBM; Computer Associates International, Inc., Islandia, N.Y.; Oracle Corp., Redwood Shores, Calif.; and Software AG, Reston, Va.

The loan system lets bank employees trace transactions from initial loan application to final payment. The system computes payments, penalties and interest based on built-in parameters.

The bank developed the loan system using Cincom's Supra, a relational database management system (RDBMS), and Mantis, a 4GL application development language, running on an IBM 3090 MVS/ESA. The 3090 has replaced three IBM 4341s running PL/1 programs. PNB is consolidating all corporate data at a central repository while it ports or deploys data and applications to the Unix environment with little or no modification. Once the system is fully implemented, data processing will be distributed to the most cost-effective platform. The system will tie corporate headquarters in Manila with PNB's 300 branch offices located in various regions on different Philippine islands.

"With so much functionality and deliverables, we are contemplating marketing [the loan system] to other banks in the Philippines," said Pete Cruz, PNB assistant vice president for technical support. "[The Supra/ Mantis solution] is playing a crucial role in PNB's strategic direction," he added.

Supra offers portability across hardware and operating system platforms -- from IBM mainframes to VAX/VMS minicomputers from Digital Equipment Corp., Maynard, Mass., to Unix-based workstations and MS-DOS personal computers.

Supra's three-schema architecture, consistent with American National Standards Institute (Ansi) standards, proved attractive to the Philippine bank.

The architectures upper layer (External Schema) defines how users see data. The middle layer (Conceptual Schema) defines the corporate data model and the lower layer (Internal Schema) holds the physical data definitions.

Cincom maintains that this architecture provides insulation from change between the layers. This frees applications from their dependence on physical and logical structures within the database.

From Cruz's point of view, the bank has made a solid commitment to open systems technology in downsizing from the mainframe to Unit Analysts, though, question whether the Philippine banks downsizing move represents a move to open systems.

OPENNESS QUESTIONED

"Using a Supra/Mantis strategy for downsizing applications from the mainframe to Unix is hardly an open systems strategy," said Tony Percy, vice president of Software Management Strategies at the Gartner Group, a consulting firm based in Stamford, Conn. "Some people equate open systems with running on Unix, but [in this case] they're still locked in to whatever Cincom does with Supra."

Ed Acly, research director of soft, ware at International Data Corp., Framingham, Mass., echoed Percy's sentiment. "If you look at purely open systems, most [vendors] will lock you into something. Though they open up choices of platforms for users, they'll lock you into specific software suppliers," he said.