The growing momentum of digital banks in the Asia Pacific region will raise the industry’s bar in delivering innovative offerings and threaten the longstanding dominance of traditional banks.

Coupled with increasing customer demand for always-on access to advanced digital banking applications, incumbent players can no longer afford any downtime if they wish to build customer experience based on outstanding convenience and trust.

DigiconAsia discussed the role of connectivity in shaping the future of banking with Anup Changaroth, Chief Technology Officer, APJ, Ciena:

Anup Changaroth, Chief Technology Officer, APJ, Ciena

Why has connectivity become even more critical for banks today?

Anup: We’re in the midst of a digital banking revolution in Asia Pacific. Regulators across the region are pushing for the transitions into digital-first, cashless societies, while financial institutions are reinventing their systems and processes to adapt to the changing needs of customers. 

More than ever before, banks require always-on access to advanced digital banking applications that allows them to seize market opportunities, overcome challenges and manage risks in the fast-paced world of finance.

The connectivity that underpins it all ensures banks to have the visibility and flexibility to continue delivering revenue-generating applications, while addressing regulatory requirements and delivering quality customer service. Not to mention, banks build their customer relationships based on outstanding experiences and trust. A network failure in an industry where time is money, might erode that trust and have lasting reputational damage.

What are some advanced banking applications that are transforming the banking experience, and which require always-on connectivity?

Anup: Banks are now deploying more fintech solutions to offer nimbler, customer-centric services via multiple channels. As such, banks will need to prepare their networks for an inevitable increase in customer traffic with web-scale networking between data centers that can react to fluctuations in traffic demands in real-time.

They are also opening up their systems with APIs that enable third-party firms to provide smart, secure, authorized access to specific banking services via non-traditional digital channels. Delivering these capabilities require a greater degree of interconnections within a bank’s data centers, external facilities and financial exchange points that interlink all the financial resources in remote data centers. To deliver the expected customer experience, these connections need to be flexible, secure, scalable, and highly available.

Additionally, real-time payments are becoming “the future of payments.” As consumers and businesses conduct more transactions and other procedures via digital payment tools, the increasing interactions with the network and the aggregated impact of data flows needed to complete these transactions will place new demands on data center interconnections. Banking infrastructure will need to support these demands and fluctuating traffic requirements, while ensuring the high volume of financial activities is secure.

With always-on connectivity essential to digital banking, what role does software play? What can banks in Asia Pacific do to prevent downtime and outages, as well as mitigate the risk of recurrence?

Anup: Many banks rely upon IP/MPLS networks to connect their branches to data centers and cloud service providers. Major branches serve as concentration points, combining traffic from smaller branches before forwarding to the backbone network to reach data centers and cloud services.  With the demanding performance requirements of new digital applications and the growing complexity of IP/MPLS networks, outages are a top-of-mind concern for network teams.

Banks need to have visibility into their network in order to quickly troubleshoot and resolve outages. Often, even pinpointing the root of the problem can be an onerous task, involving numerous hours of manual work to analyze the events leading up to the outage, checking error and change logs for DNS servers, proxy servers and network devices.

Using the right software tools can provide banks with the network performance monitoring and analysis necessary to quickly detect and resolve such outages. They can help bank network teams to perform real-time monitoring and alerting of route, path and topology changes, as well as deliver meaningful insights that correlate network performance and routing behavior with service delivery.

For instance, having a “play-back” function could provide banks with a back-in-time forensic analysis of events leading up to outages. Interactive modeling of routing behavior can assist network managers in evaluating “what-if” scenarios and allow them to take proactive steps to mitigate the risk of future recurrence.

What does an optimal network design for a bank in APAC look like?

Anup: Financial institutions of today need network backbones that can facilitate increasing traffic from customer interactions, as well as support the data flows generated from third-party applications and service aggregators. In addition, they need the ability to adjust bandwidth and capacity in real-time to meet variations in network demands, while delivering the network performance required for fast and secure banking transactions.

With banking becoming increasingly mobile, data consumption will only continue to grow at the edge. This necessitates a flatter network infrastructure model with less equipment as there are significant space and power limitations at the edge.

As such, it is essential that banks have open and flexible networks that can improve efficiencies and facilitate the introduction new business models. A holistic network of adaptable hardware and software technologies helps banks meet the most demanding end-to-end connectivity needs for current and future digital services. For example, key ingredients would include:

  • High capacity Data Center Interconnection (DCI) technologies
  • Carrier-class Ethernet services built for web-scale operations
  • Customer premises equipment that brings Ethernet to bank facilities
  • Software-Defined Networking (SDN) and Network Functions Virtualization (NFV) solutions

The combination of these solutions will help banks to allocate bandwidth dynamically and optimize the use of resources, while increasing IT efficiencies and reducing costs.