After almost a decade focused on readjustment, restructuring and regulatory reform, financial institutions are now starting to pay more attention to returns and revenue generation. Optimisation of IT and network infrastructure is a fundamental aspect of this.
A wave of unprecedented technology innovation has reshaped consumer experiences and expectations across many industries in the last ten years or so. However, in the wake of the global financial crisis, financial institutions have been focused on meeting regulatory challenges, often to the detriment of customer-focused innovation.
Slowly, but surely, that picture is changing. The regulatory challenges have not ceased, but they are starting to look more manageable. Firms are now turning their attention to growth. The tools that have transformed other industries are now being used in the finance sector to deliver more tailored, value-added services on a more cost-efficient basis.
Innovation in Finance
Wealth managers are deploying artificial intelligence (AI) programmes in response to robo-advisors; market infrastructure operators are weighing the cost-efficiency benefits of distributed ledger technologies; and retail banks are continually upgrading mobile apps to deliver faster, more granular and more flexible payment and account services. At the same time, the combination of cloud-based computing and AI is offering more cost-effective ways to identify atypical patterns across vast datasets, helping in areas such as trade surveillance and cyber-security. Many expect AI to expand into the front office too, driving customer interactions, and analysing feedback to improve the quality of digitally-delivered services.
The future of finance may be brighter, but it isn’t plain sailing yet. In particular, infrastructure adjustments are necessary to offer the improvements in customer service, operations and risk management offered by technology innovation. Today, many large firms in the sector still rely on traditional hub-and-spoke networking architectures, which are tried, tested, secure and reliable, but lack the flexibility to cater for changing data and workflow requirements.
In order for banks to compete as they roll out more digital-based services, they need to enable their data workflows to be intelligently, dynamically routed according to a range of criteria, co-opting the Internet as and when appropriate. This is why technologies such as Software-Defined Wide Area Network (SD-WAN) are increasingly being adopted in the sector, as they help firms to optimise their networks from a security, performance and cost-efficiency perspective, enabling rebalancing of data flows where appropriate to guarantee performance.
Not only does such a flexible approach to networking enable firms to prioritise different types of workload, it also allows them to effectively outsource the management of certain non-critical applications to third parties, possibly via cloud computing services, and focus their IT resources and management time instead on core customer-related and business-critical demands.
Preparing for Change
Flexibility is the critical factor, not only in routing flows, but in anticipating future innovation. The pace of technology-driven change so far in the 21st century tells us only one thing for certain: more change is on its way. Financial service providers may see revenue and growth opportunities today, but to secure them tomorrow as well, their business models and operating infrastructures, including networks, must be able to accommodate change in perpetuity. With the right network architecture in place, financial institutions lay the foundations for the delivery of innovative revenue-generating services.