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Why financial services organisations are in need of a network transformation

Why financial services organisations are in need of a network transformation

By Michael Wood, CMO at Versa Networks

Businesses in all sectors have been under increasing pressure to digitise their offerings in recent years, particularly over the last 12 months in the wake of COVID-19. Few fields have felt this pressure more keenly than the financial sector, where customers have developed a very strong expectation for high quality digital services.

The most recent research from the ONS found that 73 percent of UK consumers now regularly use online banking applications, with the percentage rising above 90 for those below the age of 25. With the COVID pandemic rendering many financial organisations unable to provide any on-site services for much of the year, this trend will undoubtably accelerate.

As well as basic services like money transfers and payments, there is a growing demand for more involved functions such as loans, mortgages, insurance, and wealth management to be fully deliverable over smart devices and laptops.

The nature of financial services also means that these digital offerings must be available with a high degree of reliability and security. To succeed in the hyper competitive digital era, financial institutions need to invest in the right technology to transform the underlying network that powers their essential services.

The evolving cloud landscape

Delivering the polished, reliable, and secure frontend experience that customers demand depends on creating a more simplified system at the backend. Establishing greater autonomy and automation as well as reducing the level of manual exchanges will result in a dramatic increase in quality.

The cloud is one of the most important factors here. Most financial organisations are now making heavy use of cloud services, whether through public cloud offerings like Azure, Amazon and Google, or their own private infrastructure. The shift to the cloud has created a new level of scalability and adaptability, better enabling firms to manage sudden influxes in demand in anything from financial transactions to interchanges between banks.

The growth of the cloud has also had a major impact on the way financial organisations secure their operations and safeguard their reliability of their services. Leveraging multiple public and private clouds enables organisations to build in multiple secure paths and redundancies. In the worst-case scenario where a disaster brings down a hosting facility, there will be others running the same applications.

Secure cloud provision is also a major factor when it comes to a remote workforce. Previously, most organisations relied on their employees working out of central office buildings, meaning there would be a single point of focus for security and redundancy planning. Now, with workers operating out of potentially thousands of separate locations, it is essential to build systems that can replicate this same level of security and reliability across the newly scattered workforce.

Investing in simplified infrastructure

While digital transformation is often thought of in terms of applications and devices, this is really the tip of the iceberg because it is actually the supporting backend infrastructure that makes the real difference.

One benefit of modern banking infrastructure is that when it comes to elements such as the backend systems and hosting, it’s easier to shift things over and reverse things if there are any issues. Thanks to application APIs, organisations don’t necessarily need to buy and spin up new hardware to accomplish this.

Michael Wood

Michael Wood

Nevertheless, having to backpedal during a project still represents a significant operational expense and sunk capex cost. Perhaps more importantly in today’s hyper-competitive market, it also means lost time. Losing weeks or months can give rivals a huge lead.

This means it is essential for banks and other financial businesses to plan very carefully when selecting systems and infrastructure. As a result, there has been a strong trend towards simplified, infrastructure. Consolidating multiple functions together means the resulting infrastructure will be more streamlined and require far fewer IT personnel to set up and maintain, as

well as reducing the cost burden of paying for multiple separate services.

Introducing SASE

One of the leading examples of this consolidated approach is Secure Access Service Edge – or SASE, pronounced “sassy”. Rather than being a specific new technology, SASE is used to denote existing services being integrated into a single solution for the first time. SASE typically incorporates wide area networking (WAN) and security solutions such as Zero Trust and firewall-as-a-service (FWaaS) into a single service, which can then be delivered entirely through a cloud infrastructure.

Alongside the efficiency and cost reduction delivered by any form of consolidated technology, SASE can also provide stronger threat detection and data protection capabilities, and everything can be managed by a single unified solution. It also makes it much easier for organisations to implement identity management and authentication policies across all their locations, improving their ability to identify unusual behaviour and applying risk-based authentication processes automatically.

When operating separately, security elements such as FWaaS and SD-WAN often have a great deal of overlap and many steps are repeated, creating inefficiency, latency, and performance degradation. Because SASE involves a single software stack, data no longer needs to pass through multiple devices, server stacks, and virtual network functions (VNFs).

As a result, SASE can deliver significant improvements to connection speed and help to reduce latency which has always been key in most financial services, and particularly over the last year with so many employees now regularly working remotely.

Flexibility is key

Because SASE provides multiple solutions through the cloud, there is a high degree of flexibility in how services are delivered. This is particularly useful for larger financial organisations that are likely to have a number of different locations of varying sizes and needs. It has also become a prominent factor in supporting remote workers.

For example, leading banks often operate ‘power branches’ that will not only be doing standard banking transactions, but also many other services such as business banking, wealth management, brokerage services and mortgages.

These locations will naturally create a very high level of traffic and will need robust security in place to protect all the sensitive financial data being transferred back and forth. As such, this type of location is well suited to a “heavy branch” approach where most of the networking security elements are on-prem, with a minority delivered through the cloud.

Contrasting this, there is also a growing need to support locations with a “light branch” approach, where most of the networking elements are provided through the cloud and a minimum is present on site. These locations will require fewer services and will carry a lighter footprint. With remote working, this could be just a single individual user, but other examples include ATMs and smaller buildings. A light branch approach means that any location can access the same level of secure and reliable solutions, regardless of on-site capability.

Investing in digital capabilities has been a leading priority for the financial sector for several years, but the COVID-19 pandemic has greatly accelerated the trend. Not only must banks and other financial organisations be able to deliver fast, reliable, and secure digital services, but they must also now make sure they can do the same for their employees. Establishing network infrastructure based around a streamlined, consolidated backend that follows the SASE model is one of the most important steps in preparing for the latest developments in the digital age. With the right infrastructure in place, financial services organisations can ensure that all customers and employees can access the full range of services on offer, wherever they may be.

Global Banking & Finance Review


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