Why Financial Services Needs Network Transformation

All business industries have seen increasing pressure to digitize their services in recent years, particularly over the past 12 months in response to COVID-19. But few industries have felt this pressure more than the financial sector, where customers have grown to expect high-quality digital services, particularly since so many financial organizations are unable to provide on-site services like they could before the pandemic.

In addition to basic services, such as payment and money transfers, there is a growing demand for more involved functions to be fully deliverable over smart devices and laptops, including mortgages, insurance, loans and wealth management.

The financial services industry also requires that these digital services be delivered with a high degree of security and reliability. To thrive in today’s competitive digital era, financial institutions must invest in the right technology to transform the underlying network that powers their essential offerings and differentiation.

Cloud Adoption in Financial Services

Financial services organizations need a more simplified system on the back end to deliver the high-quality, secure and reliable front-end experience that customers demand. Dramatic increases in quality can be achieved by establishing greater automation and autonomy while reducing the level of manual exchanges.

One of the most important factors in this evolution is the cloud. Most financial organizations increasing rely on cloud services, such as public cloud offerings including Azure, Amazon and Google, or their own private infrastructure. Cloud adoption has created new levels of adaptability and scalability, and organizations are now better equipped to manage sudden influxes in demand in everything from interchanges between banks to individual financial transactions.

The cloud has also impacted the way financial organizations secure their clients’ data and ensures the reliability of their offerings. Organizations can achieve multiple secure paths and redundancies by leveraging multiple public and private clouds. In a disaster recovery scenario, for example, if a hosting facility goes down, there are other locations running the same applications able to continue services.

Secure cloud provisioning is also critical for today’s remote workforce. Pre-pandemic, when most organizations relied on employees working from central office buildings, a single point for redundancy and security would suffice. Today, with employees working out of potentially thousands of scattered locations, organizations must build systems that can replicate the same internal level of reliability and security across distributed remote workforce.

The Benefits of Simplified Infrastructure

Digital transformation is often thought to focus on devices and applications, but it is the back-end infrastructure that makes all the difference.

Modern banking infrastructure has evolved with elements such as hosting and back-end systems more easily able to shift over if issues arise. With today’s application APIs, organizations don’t always need to buy and spin up new hardware to accomplish this. This prevents significant operational expenses and sunk capex costs that were challenges in the past. In today’s hyper-competitive market, this also means lost time, giving rivals a huge jump.

It is essential for banks and other financial services organizations to carefully plan when selecting systems and infrastructure, resulting in trends toward simplified infrastructure. For example, consolidating multiple functions results in a more integrated infrastructure that requires less work to set up and maintain, while reducing the costs of paying for multiple separate services.

The Benefits of SASE

One of the leading examples of this integrated approach is SASE, or secure access service edge. SASE is not a new technology, but refers to existing services that are, for the first time, consolidated into a single solution. These services often comprise security solutions including zero-trust network access (ZTNA) and firewall-as-a-service (FWaaS), as well as wide area networking (WAN) and SD-WAN, integrated into a single service, which can be delivered via a cloud infrastructure.

In addition to cost reduction and efficiency, integrated services in SASE can also deliver unified threat detection and data protection capabilities, all managed by a single solution. SASE also enables organizations to more easily implement uniform identity management and authentication policies across all locations, improving their ability to identify unusual behavior and apply risk-based authentication automatically.

Security and networking elements, such as FWaaS and SD-WAN, often overlap when operating separately, and many steps are repeated, creating inefficiency, latency and performance degradation. With SASE, data no longer needs to pass through multiple server stacks, devices, and virtual network functions (VNFs) due to its single software stack. SASE can deliver considerable improvements in connection speeds and reduce latency, which is critical to many industries, but especially financial services, particularly now with so many employees working remotely.

SASE Flexibility

Another important advantage of SASE is the flexibility of services delivered, since it is able to provide multiple solutions through the cloud. This is especially useful for larger financial organizations that have many locations of different sizes, all with varied requirements. SASE’s benefits for supporting remote workers have also been proven.

For example, larger banks often have “power branches” that conduct not only standard banking transactions, but also other client services such as brokerage services, mortgages, business banking, wealth management and even car loans. These locations create high levels of traffic and need not only robust networking but also advanced security to protect all the sensitive financial data being handled. This type of location requires a “heavy branch” approach, where most security and networking capabilities are on-premises, with few functions delivered through the cloud.

On the other hand, there are also financial services locations with a “light branch” approach, where most of the networking and security capabilities are delivered through the cloud, with few services on site. These offices require fewer services and have a lighter footprint. This could be a single individual user working remotely or, to cite other examples, ATMs and smaller buildings. A light branch approach means that any location can access the same level of reliable and secure SASE capabilities, regardless of on-site capability.

Digital capabilities investments have been a priority for financial services organizations for years, but COVID-19 has greatly accelerated this need. Not only must banks and other financial organizations deliver fast, reliable and secure digital services for customers, they now must also support their remote employees. Leveraging network infrastructure based around an integrated and streamlined 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 organizations can ensure that all customers and employees can access the full range of services available, no matter their location.

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Mike Wood

Mike Wood is CMO at Versa.

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