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A Secure Financial Future: Building Networks to Support the Rapid Digitization of the Banking Sector

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A Secure Financial Future: Building Networks to Support the Rapid Digitization of the Banking Sector

By: Nabil Khalil, Executive Vice-President of R&M Middle East, Turkey and Africa

Worldwide, IT investments in the financial sector grew more than 5% in 2017 and market research firm Gartner has forecast an investment volume of $519 billion for 2018, representing a further increase of 4.1%.

In the Middle East, the Banking and Financial Services Industry (BFSI) leads digital transformation with a 24.5% share of the market in 2015 that is projected to maintain a robust CAGR of 17.9% over the 2015-2021 period[i].

Firm Footing

While it is clear that the BFSI sector is currently focusing on modernizing IT, new software and IT hardware alone are not going to be enough. The underlying network infrastructure upon which traffic in the data centre is actually transmitted is often treated as an afterthought and this presents a potential business risk. Unless this critical network layer can deliver the performance expected of today’s applications, users- both customers and employees- will face issues when they try to connect to the Bank’s digital services.

Nabil Khalil

Nabil Khalil

This challenge is exacerbated by the fact that due to competition, digital services are being brought to market at an ever-increasing rate, resulting in an explosion of data traffic. Financial institutions have to think about higher categories of data transmission and fundamentally new LAN infrastructures. Agility and scalability of networks are essential to be able to offer innovative services at all times and to tap into new revenue streams.

There is no way a bank can satisfy future requirements with conventional, static office networks. Unfortunately, the long-term requirements for bandwidth, headroom and scalability are not being paid enough attention to when it comes to investment planning. To date, most financial institutions have LAN infrastructures that were designed to cope with no more than 1 Gigabit Ethernet (GbE). Today however, transmission performance of 10GbE, ten times as much, is required, and in the data centre segment, even greater performance levels have to be ensured.

It isn’t just customer experience that hinges on high-speed connectivity as high-performance communication is becoming a critical corporate requirement as well. Mobile and fixed workplaces, teams working over geographically dispersed locations, virtual applications and multimedia visualizations are all vital elements of the modern Bank and they all have to be able to be connected fast.

Planning for Success

Addressing these needs and developing a network infrastructure for long term success requires forward thinking network planning and the main criteria which play a decisive role in this are:

  • Stricter security, risk and compliance requirements.
  • Innovative applications such as big data, virtualization, artificial intelligence, cloud computing, mobile banking, decentral transaction concepts such as blockchain.
  • Competition from the FinTechs and internet groups.
  • The high expectations of customers looking for reliable, secure real time services available everywhere.

Designing for these requirements, the LAN should be planned with the greatest possible headroom. Unlike software and active components like servers and storage, cabling systems have to support new applications and equipment for up to twenty years. For this reason, they should be designed on a modular basis so that they can be extended or upgraded at any time with a ‘plug & play’approach.

Alongside headroom for higher bandwidth and data transmission with no delays, security is the Banks’ greatest concern with respect to networking. Maximum security can already be integrated at the networking level by using systems such as tamper-proof shielding, and Automated Infrastructure Management (AIM) which protects connections from incorrect operation and manipulation through real-time monitoring.

While a LAN with 10 GbE transmission performance would likely exceed the current needs of financial institutions, increased digitization of services, mobility of the workforce and expansion of business to the network edge will soon demand utilization of all available bandwidth. Strategic investments made today, will determine the digital success of financial institutions for years to come and provide them with a platform upon which they can rapidly innovate to gain a competitive edge.

 R&M in the Banking Sector:

R&M draws on its comprehensive international experience in the financial sector to support the BFSI industry with specific solutions for structured cabling in office buildings and data centres. The cabling specialist has been supplying renowned Swiss banks for decades. Most recently R&M has shown its specific expertise in major projects in Zurich, London, Cairo, Amman, Abu Dhabi, Mumbai and Shaoxing where it has provided international teams and local support for installation tasks, training sessions, quality assurance and project management.

[i]https://www.researchnester.com/articles/middle-east-and-africa-digital-transformation-market-to-be-augumented-by-rising-focus-on-enterprise-mobility-in-future/67

Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 1

By Sagarika Jaisinghani and Ambar Warrick

(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.

The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.

The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.

Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.

Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.

But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.

“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.

“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”

Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.

The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.

The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.

London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]

French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 2

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

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Banking

Where are we with Open Banking, and should we be going further?

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Where are we with Open Banking, and should we be going further? 3

By Mitchel Lenson, Non-Executive Chairman, Exizent

Open Banking has the power to revolutionise the way we manage our money, but most (65%) consumers are still not aware of it, while many financial institutions continue to treat it as an obligation rather than an opportunity.

For Open Banking to truly reach its potential, consumers need to have more trust in its benefits. However, this will only happen if banks and other financial institutions start to embrace it, rather than simply accept it.

Covid-19 has proven to banks that digital banking and open finance innovation is not simply a ‘nice to have’. It is vital for their own survival. With so many challenger banks now coming into the market, many of whom have entirely digital models and therefore invest heavily in technology, banks are starting to become aware that if they don’t embrace it, they’ll get left behind.

So, fuelled by a mixture of competition and Covid-19, banks are starting to realise that Open Banking is not about giving away valuable data, but it is about collaborating with third party fintechs to explore the endless opportunities data sharing can bring – to all sides.

By making open finance easier for developers, banks can not only save time and money by improving their own services but help create useful solutions that add real value for their customers.

Open Banking for all?

There is one, yet untapped area of consumer finance that could be immeasurably improved by Open Banking, and that is estate administration.

Mitchel Lenson

Mitchel Lenson

Recent research from Which? found that many executors contend with delays, errors and poor knowledge from their banks during the probate process. Our own research shows that most legal professionals admit the process does not work as it should, and the time it takes to complete probate is unacceptable.

Like the Which? survey, we found that the main issue is the administration involved, with most legal professionals saying that the time it takes for financial institutions to get back to them with the information they need is the main cause of delays.

Given that the system is not working for consumers, something clearly needs to be done. The good news is that the technology and data is already available – we just need to harness it to create a better system.

That is why we are developing the first ever platform to connect executors, legal professionals, and financial institutions to create a better, quicker, and more secure probate experience for everyone.

Our first release of the platform – a bespoke cloud-based solution to enable legal services firms to integrate directly with financial institutions making information gathering and processing more straightforward – was released in 2020. We are now building on that foundation to accelerate our development work with financial institutions to deliver additional value for all sides.

We also see huge potential in working with banks to utilise the digital financial infrastructure, powered by Open Banking, to improve things even further. But there is one, fairly sizeable issue – currently, Open Banking consent ceases at the point of death.

Is it time for legislative change?

Open Banking is not as open as is should be for those who can give consent, so we are certainly some way off from Open Banking for the deceased.  However, the more that banks acknowledge Open Banking and its potential and are prepared to collaborate with third party fintechs to develop better experiences for consumers, the more likely we are to get to a point where we can tap into that potential to improve things for the bereaved.

Many of the problems – highlighted by Which? – that consumers face when managing someone’s estate could be reduced significantly if open finance continued to apply to the deceased.

Open Banking provides a huge opportunity to speed-up and reduce friction for loved ones faced at some of the hardest moments of their lives, and there is a strong argument here for the current position to be reviewed to enable better access to a deceased person’s assets.

With our current platform, we are showing how technology is playing an incredibly significant role in dealing with the complex, tangled process that is probate and the potential of open finance in radically enhancing what we are already doing cannot be understated.

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