Daiwa Next Bank deploys Linux to cut IT costs by half

By migrating from UNIX to Red Hat Enterprise Linux, Daiwa Next Bank has reduced its technology costs by 50%, aside from realizing tremendous gains in the scalability and performance of its mission-critical system.

Red Hat, Inc., a provider of open source solutions, reported that Daiwa Next Bank, the Internet bank of Daiwa Securities Group, headquartered in Tokyo, Japan, selected Red Hat Enterprise Linux as its enterprise operating system for its core banking system,

Daiwa Securities Group operates core businesses such as retail and wholesale securities, asset management, investment, as well as system support and research services. Under its unity within the group approach, the banking institution provides a broad range of services to various clients. Daiwa Next Bank was established as a new type of Internet bank that acts as an agent of Daiwa Securities Group to provide customers with one-stop services for a full range of investments services.

“When Daiwa Securities Group’s system renovation started in 2002, we realized that open source software is necessary for IT standardization to reduce cost, depart from vendor lock-in, and achieve reliable and stable operations,” said Koichi Suzuki, senior executive managing director, Daiwa Institute of Research Ltd., a core information-generating institution within the Daiwa Securities Group.

Daiwa Securities Group began using Red Hat Enterprise Linux gradually in 2004. It has also constructed its internal cloud called “Daiwa Cloud,” a common platform across the group, using Red Hat Enterprise Linux. Based on this experience, Daiwa Next Bank developed one of the first highly-reliable core banking system built with Red Hat Enterprise Linux in Japan.

“Red Hat has a proven adoption track record with leading organizations, including our group companies. Since Red Hat Enterprise Linux is highly versatile, we can continuously utilize knowledge cultivated from others who have similar deployments and then apply these best practices to our systems. This is a major benefit offered by open source software,” said Suzuki.

Daiwa Next Bank has completed the migration of UNIX-based package system to Red Hat Enterprise Linux in only nine months. Migrating to Red Hat Enterprise Linux provided the banking institution with several cost-cutting advantages.

“The cost to build our core banking system with Red Hat Enterprise Linux was cut in half compared to deploying UNIX,” said Masami Mizushima, managing director, head of information technology department, Daiwa Next Bank.

“In addition, when hardware is procured in the future, we expect that the cost-effectiveness will be lower due to the high-availability of versatile servers. In the end, this will lead us to be able to provide valuable, long-term services to our customers,” he said.

While maximizing Red Hat technology and synergy inside Daiwa Securities Group, the company will be able to provide optimized products and services that align with its customers’ needs all from using open source technology as an enabler to achieve these goals.

“I think open source is the future and is most definitely the mainstream in cloud computing,” said Suzuki. “We believe that Red Hat, as a leading open source technology company, will continue to provide our firm with robust support and services enabling users to fully enjoy the benefits of open source.