The financial industry is long overdue for a technological transformation. Most financial services companies are still relying on tools that are weighed down with archaic complexity and they’re losing their way in today’s fast-changing landscape, which is full of new customer expectations and potential security threats.
Mobility today is changing the dynamics of common practices, and financial institutions need to modernize their networks to keep up with this reality. This entails strengthening the capacity to deliver transaction data securely through the network into a traditional payment infrastructure – the network plays a critical role in this process. Banks have to ensure their networks are modernized and able to deliver.
To better illustrate this, consider the top four technologies that made the biggest impact in 2015. According to 51 leaders who responded to the second annual Envestnet® | Yodlee® Global Fintech Influencer Survey, these technologies include: payment technology, data analytics, authentication & security, and blockchain.
A closer look at each of these technologies tells us how they’re reshaping what it takes to modernize financial industry IT networks.
Payment technology. It’s easier these days to purchase a cup of Starbucks coffee with a smartphone app than it is to do something as fundamental as pay a mortgage, credit card, or utility bill.
That’s partly because new innovations (many of them focused on the customer experience) coming from the outside are running into roadblocks when they interface with older, legacy back-end systems. Those back-end systems have yet to catch up with the front-end customer experience.
That’s both a technological and a branding problem. I like that I’ve used the same bank for my personal accounts for more than 25 years. But younger consumers don’t care as much about their relationship with the institution as they do with the user experience. Even without brand loyalty, the younger generation has shown they will switch instantly if they think the experience is better elsewhere. Financial services companies have to be able to respond by delivering the type of experience these users want while staying true to the brands they’ve worked so hard to create.
Automation is a solution that has the potential to retool the financial industry, just as it has in other industries. For example, the auto industry transformed itself by shifting from people building cars to a greater reliance on robotics. Similarly, at Juniper, we’re helping our financial services customers move away from systems that require enormous man-hours and unneeded complexity toward automation solutions, such as the Junos® Space Management platform, Cloud Analytics Engine and Contrail Service Orchestration. These solutions simplify network management, increase reliability, and, ultimately, give financial services customers the experience they are coming to expect.
Analytics. Every network contains an ocean of information. The challenge for financial organizations is to pinpoint the information they really need so they can assess network performance precisely when they need it.
Just as we’ve seen in other industries, all too often, network systems in the financial industry are allowing multiple applications to compete blindly for primacy. Some applications receive priority treatment simply by being put into the queue first, as other more essential applications end up on the back burner. This is not ideal; applications should be prioritized in terms of their ability to deliver essential services, not because they were “first in line.”
In addition to application prioritization, financial institutions need rich and nimble analytic toolsets to gauge the efficacy of their networks in normal or emergency situations. Juniper offers this valuable insight through our Cloud Analytics Engine, which helps customers understand workload and application behavior across physical and virtual infrastructures, and through WANDL IP/MPLSView, which uses simulations to optimize multivendor, multiprotocol, and multilayer operations.
Authentication and security. These two points are critical for all financial institutions. Unfortunately, many organizations are taking an antiquated approach to security in their networks.
Historically, security has been driven by perimeter protection – which is like trying to prevent outsiders from penetrating an egg through its shell. The trouble is that, once those intruders get through the shell and into the egg, they can do what they want to the yolk. Furthermore, breaches today are often times coming from inside a network, not the outside.
This is why Juniper’s new Software-Defined Secure Network (SDSN) approaches security more holistically. From north to south and east to west, everything in the network needs to be secure, not just the perimeter. This approach leverages policy, detection, and enforcement with centralized management and automation. This is especially valuable to companies that move their workloads to the cloud.
We believe that Juniper’s SDSN is the shape of security for the foreseeable future, and it’s what financial services companies will need to stay current, with a secure network, in the years to come.
Blockchain. Over the last few years, we’ve all seen a steadily rising flow of fintech investment – in the hundreds of millions of dollars – into blockchain technologies, and many established financial services companies are making big bets to adopt them for themselves. When you see that kind of investment, you can tell it’s no longer a science experiment – it’s the next truly transformational innovation.
The blockchain idea of having one ledger in which many disparate parts of a single operation can simultaneously and immediately update information, dramatically decreases the complexity of a system’s authentication. And that, among other benefits, brings greater security, too.
A lot of fraud occurs because banks are not quick enough to catch it. If you buy something and exceed the borrowing limit on your credit card, for example, current systems are often too fragmented to flag that discrepancy fast enough to stop it. Blockchain, by contrast, is real-time, so it simply won’t allow anyone to game-the-system.
Yes, a few financial services institutions have begun to adopt cutting-edge applications and systems approaches, but there’s still a lot of room for the transformation they need to stay current and secure. Technology and the network will play a big role in that process.