When Fast is Not Enough

JUL 18, 2008 2:56am ET
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With the possible exceptions of the assembly line and Internet shopping, nothing in the last 100 years has changed the business of commerce as much as electronic fund transfer (EFT) services. Just as cell phones steadily replace landlines, a new generation now takes paperless transactions for granted  - and wouldn’t know what to do with a checkbook if it had one. The EFT business has grown with the times to offer virtually any kind of payment service, from deposits to transfers and refunds across a growing array of traditional and portable devices.

 

Shazam seems an unlikely name for the sixth-largest U.S. EFT, though it reflects the seemingly magical high-speed proficiency of the top industry players. Founded as a non-profit, member-owned transaction switch by the Iowa Banker’s Association, Shazam now serves more than 1,700 financial institutions in 29 states and helps a clientele of mostly smaller regional financial institutions with debit and ATM processing, card authorization, merchant processing and automated clearing house (ACH) services. Enhanced services include business debit and health savings account cards, marketing, security and fraud prevention.

 

Foreseeing the need to retire expensive messaging and anticipating new requirements for micropayments and better reporting for customers, Shazam moved from legacy IBM mainframe to HP NonStop infrastructure in 2001. The switch was meant to prepare for the next 25 years of payment processing.

 

“It was a decision made at the global business level to restructure our core foundation as the evolution of payment changes and mobile banking and all those things become more prevalent,” says Terry Dooley, chief information officer and senior vice president of Information Management at Shazam. “We needed to restructure our applications to respond to product demands more rapidly.”

 

Infrastructure makeovers are always handled with extreme care at financial institutions, and Shazam’s rip and replace has yielded better than four nines of uptime for customers. Since NonStop’s SQL/MX database had replaced flat files, the company wanted to offer new data services that also had to run natively on a variety of customer platforms without interrupting service or changing interfaces. Through a technology partner, InSession Technologies, Dooley and Shazam were introduced to GoldenGate Software, which specializes in transactional data movement. 

 

“The initial motivation for us was to replicate new table structures on node as we made changes to our applications,” Dooley says. “The secondary motivation was disaster recovery planning, and GoldenGate excels at two-way versus one-way replication.”

 

Following a proof of concept and some initial training, Shazam purchased GoldenGate’s software on license and database administrators were off running with the tool. Dooley says he’s continuing to increase the value of the software and that his base expectations were quickly met.

 

Reporting and Monitoring

 

High-speed transaction processing – a core competency of the EFT industry – assures that the transactional database structure is not geared to ad hoc reporting or intensive SQL queries. Shazam uses GoldenGate to gather and transform data from the NonStop transactional data store and move it to UNIX DB2 offline database stores for billing, back-office processing and on-demand research. Dooley told us that Shazam’s administrators now actively manage, monitor and report on data transactions for data mining or trending purposes.

 

The service to customers is mostly in the form of trending perspectives: card usage, growth, the ways in which banks are using their cards and how various marketing campaigns might increase card usage. “We go in and pick up different types of data and pull that over to either the production data stores or marketing analysis data stores to allow customers to drill down and hopefully make more intelligent decisions on how to manage a customer’s profile.”

 

Shazam’s customers are provided with regular services, but often ask for custom reporting. “As a service bureau and primary processing arm for payments, we try to deliver and drive out a lot of information that we feel will be productive and informational to them,” says Dooley. “But most reporting is driven by customer request. If we see a pattern in requests we try to package that up and make it a standard report.”

 

What’s unique about Shazam is that it functions as both a switch that routes financial transactions and as a card processor that authorizes on behalf of its bank customers. “Where the industry is changing is in higher volumes of transactions because of micropayments or services such as iTunes, things that involve many more transactions, smaller dollar amounts and greater overall card usage,” says Dooley. “The only thing that keeps me up at night are the opportunities and how the industry is transforming from ATM and debit cards to paying for goods and services with a variety of media, whether it’s a contactless card, a cell phone, mobile banking through your Palm or PDA. It’s no longer the same old payment processing and new media types are just starting to hit the marketplace.”

 

As technology intercedes, it’s not so much heavy lifting as it is about having a sound strategy for integrating data in order to provide Shazam’s target audience with new services at a competitive price. “Our core customer philosophy is to enable community banks,” says Dooley. We want to provide them with the technology, products and services that allow them to compete effectively against the big banks and maintain customer loyalty at the most cost-effective price we can without compromising quality and integrity.”

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