By Alan Hayward, Sales and Marketing Manager at SEH Technology
The finance industry is undergoing a radical shift, driven by changing business models, mounting compliance pressures, disruptive technologies and new competition from FinTechs. Although operating in an evolving landscape may be a challenge for financial service organisations, it also places them in a pivotal position to cultivate and define this new era. Across sectors, financial organisations have the potential to overcome challenges and ascend to new heights by prioritising digital transformation and partnering in new ways to innovate and increase efficiency.
This new marketplace of open banking has enabled systems to quickly and seamlessly integrate with new platforms and applications. Physical banks and paper systems are rapidly being replaced by networked digital ecosystems. Regardless of whether a business was born in the digital era or is now catching up to it, none remain unaffected from the digital revolution.
With 77% of businesses in the financial services sector planning on increasing their digital investments in the next year. It is critical that businesses take an analytical and proactive approach to their digitalisation strategies to identify and prevent future network challenges in this fast paced industry.
How networks have become essential for the modern finance sector
Financial services are being reshaped by the globalisation of financial markets, technological advances, and structural changes, including the lowering of regulatory barriers. The international focus of financial services has involved increased financial integration, higher cross-border mergers and acquisitions of financial institutions, and lower barriers between markets. As the financial services industry grows globally, the need for communications and transactions spanning borders means that the finance industry has increased its reliance on the IT network.
The network is considered one of the most critical resources in an organisation, providing the means of transmitting essential data from one computer to another. Networks are the hardware and software that enable computers to share resources and exchange data. They are categorised as internets, intranets and extranets. The Internet is a collection of individually managed networks, connected by intermediate networking devices, that function as a single large network. Intranet refers to a privately maintained computer network that can be accessed only by authorised persons and is limited to one institution, whereas extranet is an extension of an institution’s intranet, used to connect business partners.
The financial services sector is currently focused on creating a faster, more efficient service for customers by creating mobile-based options. Since cloud-based technology information is so often used, the importance of networks in the finance sector is incredibly vital. Network data has advanced, now harnessing the ability to flow through an even greater variety of mechanisms: communication software and hardware, telephone wires, broadband cable, wireless and microwave transmission units, satellite, fibre optics. Therefore, today’s industry wide networks and transactional systems must be able to support an unpredictable number of concurrent users and transaction types.
Future-proofing the networks in the finance sector
The digital transformation of the finance sector, including the emergence of electronic finance, has increased the importance of networks in the production and distribution of financial services. However, banks and insurers are subject to ever more cyber-oriented regulations that range from identifying required controls to more specific regulatory technical standards or reporting requirements. The widespread adoption of online banking and mobile transactions present an opportunity for network vulnerabilities. As financial transactions are being used so frequently, many financial institutions have to adapt to the latest security and updated technology in order to keep crucial systems protected. There are billions of financial transactions occurring on a day to day basis, this is why the financial sector must invest in their network infrastructure. The software tools and computer systems that are in place for automation, create a huge importance for the use of networks in finance.
In addition to basic services, such as payment and money transfers, there is also 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.
Leveraging network infrastructure based around an integrated and streamlined backend is one of the most important steps in preparing for the latest developments in the digital age. With the right systems in place, financial services organisations can ensure that all customers and employees can access the full range of services available, no matter their location. Ensuring that their network infrastructure is secure and efficient will equip financial services providers with the tools they need in the increasingly digital financial landscape.