Software-Defined Networks can shape data packet routes to address border-control regulation and data-privacy fears, claims Dan Pitt, Executive Director, Open Networking Foundation
What is the best way to protect data? Concentrate it? Or spread it about?
If you write your memoirs and lock them in a safe for future generations, then the house could burn down and they are gone forever. But if you publish and sell them, your memoirs could survive a world war.
The Internet was designed to survive a world war by maximizing redundancy – data was not restricted to specific routes but would find its way to the destination by whatever routes were available. This thinking lives on in cloud computing, with redundancy and data backups spread across multiple regions simultaneously to defend against data loss or localized hang-ups.
The problem is that data protection can mean protecting data from loss – in which case the more copies spread about the better – or it can mean keeping data private – in which case the fewer copies the better. IT grew up in closed physical networks linking initially unreliable hardware, so the legacy priority is for redundancy, and remote back ups, and this is reflected in the way the Cloud is developing. Legislators, however, have to reconcile the benefits of free information flow with the values of privacy and individual liberty.
Data sovereignty and border control
“Trans-border data flow” is the legal term for data being stored, transmitted, or processed outside a nation’s borders. The controversial USA PATRIOT Act of 2001 gave US law enforcement agencies powers to intercept data way beyond what is acceptable in some other countries. Indonesia has strict “data sovereignty” laws that require personal information to be kept inside the country’s physical borders. The privacy value of personal data can vary between legislations: sexual orientation or religious beliefs may not be sensitive issues in one country, but could lead to persecution or even imprisonment in another.
There are several approaches to addressing this problem. Strong encryption and ways to hide the identity of data in the Cloud may provide enough protection to satisfy the individual, but they may not comply with data sovereignty legislation – bearing in mind the possibility of other national governments applying their full weight to crack sensitive data. Another method is a hybrid cloud approach, so that critical data is housed and processed on-site while less sensitive data is managed and processed on the cloud architecture.
But knowing where data is being stored is not the whole story. Personal data may be keyed into a PC with some confidence when you know it is being transmitted to a trusted Cloud service, but how does it get there? As mentioned above, the Internet was designed for maximum redundancy and flexibility, so that packets are given a destination, but no restriction on how they reach that destination. The routing is not entirely arbitrary – IP will favour an efficient pathway but heavy traffic, router outages, and line breaks can all impact the actual route taken.
So, even if the start and end point are in the same country, you cannot be certain that the data might not cross and re-cross national borders somewhere along the way. In practical business terms this might not seem an issue, but in terms of legislative compliance it could prove serious.
How could this problem be resolved without a massive rebuild of the global network infrastructure to ensure that every point where data lines cross national borders? Software-Defined Networks could be the answer.
Software-Defined Networks (SDN)
Software-defined networking allows network operators to program a network’s control plane from a central interface, using ordinary programming methods. Instead of having to go into the physical network and reconfigure boxes, general instructions can be sent out across the entire network, or subsections of the network, using the OpenFlow protocol. These instructions are introduced by software written to the aforementioned API, making the network into “a software-defined network”.
Whereas in a normal router or switch the fast packet forwarding (data path) and the high-level routing decisions (control path) happen in the same device, with OpenFlow-enabled switches these two functions are separated: the data path still resides on the switch, while the high-level routing decisions are moved to a separate controller. OpenFlow switch and controller communicate via the OpenFlow protocol, an industry standard under the auspices of the Open Networking Foundation.
OpenFlow-enabled switches and controllers are already available from multiple vendors, with vendors worldwide increasingly recognizing and supporting the standard. Incorporating these switches into a network makes it easy to adjust routing and switching protocols and optimize performance, and also to provide a way to address specific issues such as high security networking and border control.
On an OpenFlow-enabled network, packets containing personal data that should not cross national borders could be identified and instructions given for them to be routed only via national lines. More detailed routing protocols could increase the number of qualifiers and provide more detailed instructions on permitted and forbidden data pathways. Whatever the need, it can be programmed and updated from a consistent wide view, to keep abreast of regulations as well as public concerns about privacy.
SDN, as a concept, includes more than the OpenFlow protocol. It embraces programmable interfaces, virtualization, and orchestration – with companies offering proprietary SDN solutions – but the significance of OpenFlow is that it is a vendor-agnostic standard. As more OpenFlow switches are installed regardless of manufacturer, the ability to program the network will spread across the network. Add one at a time to an existing network to gradually make it more a more programmable.
OpenFlow is the way forward, even though there is much work to be done to fully exploit the benefits of SDN. Software-based policies can govern everything from border control to energy saving. The existence of a separate data plane makes it possible to program the network from a central console, but initially this is still a relatively piecemeal process, like writing a computer program in machine language. But OpenFlow as a standard lays the foundation for a new network software discipline, working towards a high-level language that will make networks as readily programmable as a PC – allowing fundamental changes such as border controls to be selectively broadcast right across the network with just a few keystrokes or automated routines.
The opportunity for carriers
Border control could be a significant market differentiator for Cloud or network services. Organisations severely restricted by privacy legislation cannot enjoy the full benefits of free-flowing data and the efficiencies of the Cloud because of the need to comply, and prove compliance, with the demands of data sovereignty. A service provider that can offer guarantees that data will never stray across certain boundaries, or enter forbidden zones, would find a ready market.
The opportunity is open-ended: what other services could benefit from an ability to shape the logical network structure and routes across it? Low latency is a hot issue in financial circles: although the most critical ultra-low-latency demands can only be met by providing dedicated contention-free channels, there is an equal need to multicast time-sensitive data such as prices to multiple customers, where the critical issue is not so much how quickly it gets there as making sure every customer gets it at exactly the same Instant.
SDN is widely recognized as the future of networking – IDC predict it to be worth £1.3 billion by 2016 – but it is a future that starts right now, with industry-standard OpenFlow-enabled switches available from all the top vendors. As it spreads, it increasingly allows the network provider to reshape their network as a logical structure and to seek new ways to increase efficiency, offer better quality of service, and rapidly explore new service opportunities.
More information about SDN and OpenFlow can be obtained from the Open Networking Foundation (ONF), a non-profit industry forum dedicated to accelerating the delivery and use of SDN technologies and standards. For further details visit the ONF website at: http://www.opennetworking.org.
The (U)X Factor: The software bringing biometric payment cards to market
By Jonas Nilsson, Product Manager at Fingerprints
With over 20 bank trials in progress and a second commercial roll-out imminent in France with BNP Paribas, contactless biometric payment cards are steadily but surely making their way to our wallets, marking what has been called the ‘biggest development in card technology in recent years’.
Innovation cannot stand still now, though. Key learnings and insights from the trials, combined with expertise from mobile biometric systems, are driving more optimized products. As you’d expect, security and privacy are always front of mind but a seamless user experience (UX) is just as important for any new technology to achieve widespread consumer adoption.
Our research found that 64% of consumers identified a low rejection rate and ergonomics as key priorities for adopting the new technology. To succeed, biometric payment cards must not only improve the security of contactless, but deliver the same seamless UX too.
Getting these aspects right has been a balancing act of hardware and software innovation. Let’s have a look at the innovation that’s taking the biometric payment card from trial to the hands of consumers.
Time and time again, research shows that consumers and retailers alike want to avoid friction at the point-of-sale (POS) that might cause frustration, embarrassment or – most critically for retailers – dropouts.
As with any payment technology, a potential source of friction lies in the interaction with the traditional payment acceptance terminal itself. R&D has zoomed in on this to ensure transaction speeds remain as slick as traditional contactless. By optimizing the power consumption of biometric sensors in payment cards, the sensor and on-card matching process can all be powered from the payment terminal in the same way contactless cards are. The ultra-low power sensor is always on ‘standby’, meaning it is ready to go at a ‘tap’ on the terminal. Care has also been taken to ensure the cards are compliant with 100% of current payment terminals power levels, greatly reducing the possibility of friction.
Given these concerns about friction, it’s unsurprising that 64% of consumers in our research emphasized avoiding false rejections, where the correct fingerprint “doesn’t work” or isn’t read, as a point of hesitation.
While security is measured by the False Acceptance Rate (FAR) – where the wrong user is authenticated – convenience can be measured by the False Rejection Rate (FRR). This rate has historically been relatively low, but is in a constant balancing act with the FAR, with greater security provisions usually meaning a slight trade-off in convenience.
However, further refinements to the hardware which captures the fingerprint image, and the algorithm which process it, have succeeded in reducing false rejections even further. Drawing on improved image quality and more efficient internal software, the sensor can now read and authenticate the fingerprint source from more angles than ever. Even better, these improvements have also reduced the False Acceptance Rate (FAR), making authentications even more secure at the same time.
Real-time, all the time
A key measure of UX in payments is speed – especially when it comes to contactless. To be able to compete, biometric payment cards must deliver the same less-than-a-second authentication as unauthenticated contactless.
The challenge, of course, is that security must remain a priority – but imposing too much latency with new protection and anti-spoofing provisions is a threat to convenient response times, and ultimately, the UX.
Once again, further innovation has been crucial here. Thanks to refined sensor technology, the latest biometric sensors are able to increase transaction speeds by some 30% compared to earlier trials.
Ready to rock and enroll!
First thing’s first, when users receive their new payment card, they want to enroll quickly and securely. A laborious enrollment process risks curbing enthusiasm for the tech and ultimately, its adoption.
The good news is that enrollment is in fact very similar to the authentication process. It benefits directly from the same refinements to image capture and quality which are reducing rejection rates and speeding up transactions. Now, with improved image quality, capture and processing, enrollment can be done at any angle – quicker than ever before.
Fingerprints at the ready
As the market stands on the cusp of major commercial rollouts, the momentum behind biometric payment cards seems unstoppable. Convenience, safety and security are making a compelling case to banks and consumers alike.
Still, it’s important to remember that continual advances in the tech are fundamental to take the cards to the consumer. Fine-tuning and further optimization of sensor technology and accompanying software and algorithms has smoothed out any remaining concerns to maintain the all-important UX appeal.
Embracing digital automation without compromising on customer experience
By Mang-Git NG, CEO & Founder of Anvil
Community banks have always prided themselves on their ability to serve their local community with an unmatched level of customer service. My family has experienced this first hand when my parents immigrated to the United States as graduate students with no credit history and very little income. When no national bank would open an account for them, the local community bank provided the banking services my parents needed to help them find their feet.
You can expect to be anonymous at a large bank but as a community bank customer, you expect a more personal connection with your banker—after all, you live in the same community.
While the ability to nurture personal relationships remains a critical differentiator, community banks face a number of ever-evolving external pressures, from the scale of large incumbents to evolving customer expectations, threatening the ability to grow their customer base and even retain existing ones. It can be especially frustrating as a long-standing customer to be asked for your basic personal information over and over again on bank forms when your relationship goes far deeper than that.
Automation and customer experience are no longer a trade-off
Small business owners are increasingly willing to pay more for products and services that make their lives easier. This trend favoring convenience is likely to accelerate with the rise of Gen Z given their preference for mobile-first instant messaging apps. With this in mind, the need to transform products and services with digital technology adoption is a top priority for many banks. In a recent KPMG survey, 72% of bank CEOs said they were prioritizing investment in new technology, and 58% even said they have begun using artificial intelligence (AI).
However, community bank leaders have faced a dilemma in the past. The adoption of automation technology often meant compromising on customer experience. We’ve all dealt with frustratingly unhelpful chatbots that are ill-equipped to handle complex queries or advice that often come up in financial services.
Fortunately, automation technology has progressed beyond simple chatbots and now offers smarter ways to authenticate users without adding more friction, predictive analytics are helping bank employees make more strategic product recommendations that match a customer’s needs, and workflow automation is enabling banks to improve customers’ account opening process while also dramatically reducing the overhead of processing applications.
Combining these digital tools with a human touch to create personalized automation, and applying each in the right way, will help community banks stand apart from large banks, keep existing customers happy, and attract new ones.
Automation and profitability go hand in hand
In 2018, fraud against bank deposit accounts amounted to $25.1 billion, including $2.8 billion in losses. Intelligent fraud detection can help minimize such losses, thus impacting the bottom line. Banks that embrace security and fraud detection technologies have a significant advantage over their peers.
Similarly, automation to help streamline existing processes can prove invaluable. Every year, paper and PDF-based processes cost banks billions of dollars. Adopting paperwork automation technology leads to faster processing times for routine, repetitive processes like account openings and loan applications, resulting in greater efficiency and reduced costs. The use of dynamic forms with built-in validation also eliminates human error and the need for manual checks.
As an added benefit, automating away mundane processes like data entry allows community banks to invest time and human capital in what they do best: getting to know their customers and developing personal relationships.
Finally, process automation can enable banks to unlock growth. As an example, Minnesota’s Sunrise Banks adopted paperwork automation technology earlier this year to increase their ability to process Paycheck Protection Program loans from 85 to almost 500 per day, thereby allowing them to extend their lending capabilities beyond their existing customer base.
Thoughtful automation is crucial for survival
Embracing new automation technologies that allow community banks to match customer expectations while improving profitability is the key to long-term sustainable growth and success. A majority of bank CEOs recognize this and believe that, without agility, they would likely face bankruptcy.
While poorly applied automation technology can be an expensive way to create a bad customer experience, it is undeniable that meeting evolving customer expectations demands thoughtful application of such technologies. To avoid automation for the sake of automation, community banks should evaluate solutions based on their ability to improve the customer experience and the bank’s bottom line.
Ultimately, bank leaders should think about their top challenges and how automation can be a part of the solution, consider if the organization is ready for an investment in both time and money, and if they have the infrastructure in place to support thoughtful automation.
Financial transformation is the new digital transformation
By Luke Fossett, ANZ Head of Sales for global recurring payments platform, GoCardless
The term ‘digital transformation’ has become somewhat synonymous with COVID-19. As teams and operations became decentralised, companies looked to quickly build their remote tech stacks, striving for ‘business as usual’ despite the circumstances.
But in the background of COVID’s chaos, different regions and industries experienced major changes, sparking a different breed of transformation beyond the digital spectrum.
Take Australia as an example. In July, the market saw the local arrival of Open Banking, as well as further detail into the regulated and planned transition away from the existing Direct Debit system to the central-backed New Payments Platform (NPP) and it’s Mandated Payment Service. With these changes comes the impetus for a wave of ‘financial transformation’; a term that describes the process of making financial operations, processes and outputs more efficient.
Despite its potential for broad interpretation, financial transformation has the potential to produce use-cases that drive value for the customer; from things like seamless payment experiences, to data-rich APIs and integrations, to managing real-time bank to bank payment and the automation of everything from customer acquisition to using data to retry a failed transaction on the date that gets the best success. These innovations are well within reach for enterprise organisations, however, to extract real value, business leaders need to plan their financial infrastructure in parallel with making digital investments.
With the right deployments, financial transformation can reap significant rewards from a customer and internal operations perspective – so here’s why business leaders should be paying attention:
Value speaks volumes to the C-suite
Financial transformation benefits enterprise organisations as well as small and medium-sized businesses (SMEs) that need to create efficiencies as they scale, but translating its value is not always easy.
Payments are a complex part of any business, impacting many different consumer-facing and internal functions. Yet the role of ‘payments specialist’ is a rarity in most organisations.
Responsibility for financial transformation often falls – and gets lost – somewhere between the Chiefs of Technology, Information and Finance. That’s why leaning on platform providers and payments experts as early as possible, is key to understanding your customers and capabilities, before you implement and invest.
Outsourcing financial transformation initiatives is a much easier sell to enterprise decision-makers than redirecting IT resources to new DevOps projects. Credible payment providers, and the specialised knowledge that comes with good ones, are in most cases a more cost-effective solution than employing a full-time expert. Translating the value of financial transformation to achieve buy-in from the C-level boils down to maximising efficiency and return on investment (ROI).
A simple solution is using automation for tasks like streamlining processes, such as collecting payments on time without human contact. Find the sweet spot between how you want your customers to pay, and how they prefer to pay; then offer those options, while making sure they can be done with little to no touch internally.
‘Best-in-class’ platform providers typically describe innovative fintech companies, who, as opposed to generalist banks, are deemed specialists in niche elements of financial services.
Again, using the example of Australasia, there are nearly 5,000 active fintechs, and it’s a market that legacy-laden big banks are tapping into. For example, Australia’s largest bank, the Commonwealth Bank of Australia, recently partnered with venture capital firm Square Peg, and AI-focused capital fund Zetta Ventures Partner; pouring $AUD28 million into new financial technology that delivers better digital banking services to its customers.
Fintech-led transformation doesn’t only have to benefit the customer; it can offer significant value for financial teams too.
In an enterprise environment, choosing the right technology allows for slick front end payments, but the true value comes in optimising financial management behind the scenes.
Take the rising consumer demand for subscription services as a use-case. According to Zuora’s Subscription Impact Report, 50 per cent of all subscription companies are growing just as fast as they were before the pandemic, while 18 per cent are actually seeing subscriber growth rates accelerate. With this trend comes a rise in companies looking to invest in recurring billing platforms that make it easy to accept regular payments, however, finding a low-touch platform that offers the financial infrastructure to support subscription-based payments will generate much greater ROI. There is no point blowing budgets on a ‘rip and replace’ billing platform if internally, finance teams still have to revert to a manual process of uploading payment files in a spreadsheet.
The future is financially transformed
The Reserve Bank of Australia’s latest Consumer Payment Behaviour survey shows that in 2007, cash was used for 69 per cent of all transactions, while last year it accounted for just 27 per cent. Additionally, over 50 per cent of Australian businesses prefer bank-to-bank payments, known as Direct Debit, over credit cards as a way to collect payments.
Payment preferences are rapidly evolving, and keeping up with consumer payment trends is key to staying competitive. To be effective, however, you need to have the infrastructure to support and accept diverse payment methods.
‘Payments as a Service’ (PaaS) is a phrase used to describe platform providers that connect multiple payment systems, enabling companies to offer several payment options while replacing outdated practices like paper-based Direct Debit.
In 2020, the most successful enterprises are utilising PaaS providers, built for self-serve and high rates of conversion. Take Bulb, for example; the UK-based energy company allows users to sign-up, switch energy providers and lock-in their payment preferences, all in under two minutes. Better yet, the process requires almost no people management.
Taking a visionary lens on financial transformation means building greater payment efficiencies for both the customer and the enterprise. Additionally, the specialist and agile nature of fintech platforms puts the organisations who use them on the cutting-edge of innovation, future-proofing operations in a fast-moving market without significant investments in research and development.
Best-in-class platform providers are driving financial transformation change; helping business navigate and plan so they are prepared for today, and for what’s coming.
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