Key Data Centre Trends for the Financial Services Industry

By Joachim Mason | 4 August 2015

There is no industry more reliant on high performing, always-on data centres than financial services as they look to store and analyse the sheer volume of data generated by their customers.

However, the role of the data centre for the financial services sector has changed. The drastic turn in revenues from financial services business units has forced leading executives to review how they run their IT infrastructure. For decades, banks ran their own data centres because of regulatory constraints around customer data and being large enough consumers of computing power meant that maintaining their own facilities made strategic and economic sense. In the current market however, this thinking has evolved.

While critical, high-speed transaction processing still relies on the latest and highest performing data centre hardware and software, trends such as security, software-defined networks (SDN), hybrid cloud and big data are now important to deliver higher levels of financial services to clients, while at the same time reducing risk and saving costs.  

In this article, we examine the five key data centre trends that we believe shape and will continue to be priorities for the data centre in a financial services context, and how firms can plan data centre roll-outs that won’t compromise performance, security, or the customer experience. 

1. Performance

The need for speed is paramount in the financial services industry. Bandwidth-hungry apps, mission-critical systems and high performance activities such as high frequency trading and digital transfers demand ever more throughput and capacity.

Fast, flexible and reliable network links are critical to ensuring overall system performance, and that data can be transferred from the data centre to any point of the network in milliseconds. Responding to this need, new data centre hardware can now deliver 100 gigabit ethernet at the core, and 40 gigabit ethernet cost effectively, giving financial services the vital competitive edge against their rivals.

Furthermore, new data centre technology  - such as line-rate Layer 2 and 3 switching and Algo Boost technology - offers significantly lower latency and faster, more reliable data processing that can accommodate temporary bursts generated by data intensive applications. Importantly, higher-speed 40/100GB links ensure that the available network capacity always exceeds the highest burst data rate, so the network link cannot become congested and that performance is optimised at all times.

2. Security and Regulatory Controls

The 2013 breach of more than 40 million debit and credit card numbers at US retail giant Target and the subsequent attack and breach of Sony Pictures’ computer system highlight the recent rise of cyber-attacks across the IT industry. It is therefore needless to say that serving financial service customer demands the highest level of security, confidentiality, and adherence to industry standard practice, regulation and monitoring.

From the location of the data centre to the security measures in place, banks and financial institutions must be vigilant and ensure that security is built into servers as a core component. To put it simply, firewalls are not enough!

In order to prevent against ever more sophisticated and complex data breaches, financial services firms need to build highly secure infrastructure with fine-grained control (including application level security), visibility and centralised automation from foundation to the application level.

The need for multi-layered operational security must also not be discounted. Secure perimeters, bio-metrics, visual identification and video surveillance are just some of the measures that must be included if financial services are to ensure that their data centre has the highest level of protection.

3. SDN

Financial services companies are now looking for open, programmable SDN for the data centre.

To clarify, SDN enables organisations to accelerate application deployment and delivery, dramatically reducing IT costs through policy-enabled workflow automation. In a high performance environment, SDN combines both physical (hardware) and virtual (software) enabling cloud architectures to deliver automated, on-demand application delivery and mobility at scale with no compromise on service quality and complete end to end visibility. This is vital for financial services companies who need flexible and scalable virtualisation.

SDN accomplishes these business objectives by converging the management of network and application services into centralised, extensible orchestration platforms that can automate the provisioning and configuration of the entire infrastructure. The result is a modern data centre that can deliver new applications and services in minutes, rather than days or weeks as required in the past.

As data consumption increases and pressure is put on both data centres and financial services to react and adapt quickly, banks must look for data centre solutions that integrate common standards with additional capabilities, such as application provisioning and delivery, for an advanced SDN deployment. Only then will they have the flexibility that is truly needed to optimise practices and deliver a seamless customer experience.

4. Converged Data Centre Infrastructure for Eco Friendly Deployments

In addition to selecting SDN and application-ready infrastructure, financial services customers must look for converged architectures that can manage application provisioning centrally and ensure that the Power Usage Effectiveness (PUE) level remains low. As an example, the latest generation of data centre servers are designed as converged platforms that combine high performance compute, network and storage access. To put it simply, converged infrastructure can significantly save costs, reduce management headaches, and offer a significantly lower data centre footprint for a greener environment.

Furthermore, financial services companies must prioritise a green energy model in light of environmental concerns and large organisations being increasingly targeted for their high energy consumption. It starts at the beginning, with a well-built data centre that is essential to reducing the environmental impact. The introduction of targeted systems such as JouleX, which is a leading energy management system, is just one example of how companies can make energy efficiency a priority.

5. Big Data

Finally, financial services firms must select data centre infrastructure that easily supports Big Data initiatives. Big Data has become big business as firms mine vast stores of data for insights that can help identify trends, predict behaviour and empower decision makers. From strategy to infrastructure, from access to analysis, a data centre provider should help banks and financial institutions take full advantage of the data they generate in order to create insight that leads to the right analysis.

It is, therefore, pertinent that a bank seeks a provider who delivers infrastructure and analytics that also supports Hadoop, as well as a partner ecosystem for more custom solutions.

With the average consumer cloud storage traffic set to reach 811 megabytes per month by 2018, compared to 186 megabytes per month in 2013 (Cisco Global Cloud Index, 2014), supporting the rise in storage needs and achieving better business outcomes will become increasingly complex.  Critically, banks and financial institutions need to understand the amount and the nature of the data that their customers are generating in order to put the storage in place to support this growth. Only then will they be able scale and introduce new capabilities that can ultimately drive more revenue. 

6. Data centres and the financial services industry

There is no denying that the data centre is the backbone of the financial services industry and holds the key to its growth. However, it is a complex relationship built on regulatory restrictions, security measures and an ambition to cope with the huge amount of data that is flowing through its network. The five key trends discussed demonstrate the power and possibility of the data centre and its impact on the financial services industry. As the data centre evolves to support the increasing need for data storage, financial institutions must embrace a more holistic approach adapting their infrastructure to suit the needs of the business. By doing so, they will be able to access and truly utilise the vast amounts of data they have at their disposal.

By Joachim Mason, Director, Data Centre, Cisco UK & Ireland

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