In 2017, a news story made headlines highlighting how banks are bringing retired IT professionals back to work to maintain their computer systems. The underlying programming language was simply so ancient that it was beyond the scope and understanding of the current employees. This example shows that the pressure on the financial sector to modernise its digital processes was already high before the pandemic. COVID-19 intensified it further. In this day and age when connectivity and technology play a major role in people’s daily lives, financial service providers need to provide advanced and seamless digital services that are accessible to the customers on the move.
Digital user experience determines competitive opportunities
The BFSI sector (Banking, financial services and insurance) was one of the most impacted industries during the pandemic. Employees working at banks and many contact centre employees working for other financial companies play a key role in ensuring secure and seamless customer experience. But COVID-19 changed this. According to a Mastercard study from November 2020, almost one in three Germans have increased their use of online banking or apps to make payments since the pandemic began. More than half are considering switching to a digital bank. Loyalty to trusted house banks is steadily declining.
“Demand for digital services and products has also been rising in the insurance sector for a long time.”
Customers demand comprehensible offers, simple processes, and fast service. Insurtech and fintech companies already offer this today and are giving tough competition to the traditional financial houses.
If they want to retain customers, BFSI sector companies need to modernise their digital services – and do so quickly. This includes, for example, smooth digital payment transactions or virtual customer service. To be able to offer such services, financial institutions need a high-performance network infrastructure. This also helps to secure processes more effectively and better protect sensitive customer data.
Hybrid network infrastructure driving the agility
Hybrid network can enable banks to leverage the combination of private WAN and VPN to connect their different branches. With many employees now working remotely, this also addresses their need to access the company’s network and applications from anywhere. Due to high compliance requirements, financial companies have so far been reluctant to use such network infrastructures. Yet network transformation can increase security by allowing a network to be managed centrally.
“Software Defined Wide Area Network (SD-WAN) enables cloud-centric, agile control of data flows via the best possible connection for the situation.”
With the inclusion of public Internet connections, performance also increases. At the same time, centralised control allows applications to be prioritised according to their relevance to business processes. It thus makes network connections agile and more efficient. It also allows costs to be monitored more closely.
The ability to prioritise is useful particularly for large retail banks, some of which support hundreds of different applications. Their requirement profiles diverge greatly: high-priority, low-latency transactions coexist with high-priority, but latency-tolerant operations and best-effort connections.
Integrated functions increase security
Hybrid network infrastructures and cloud connect solutions also allow integration of additional security features such as Zero Trust. With Zero Trust, all devices are per se classified as untrusted, regardless of whether they are inside or outside the corporate network. SD-WAN, for example, also has built-in firewalls and network segmentation capabilities. A central controller standardises and automates the distribution of patches across the network, saving time and money.
Security is an essential part of digital transformation – especially for the BFSI sector that works with highly-sensitive data, and hence becomes a preferred target for cyber criminals.
The attack by the Brazilian Trojan “Bizarro” on European banks demonstrated this again just recently. In addition to financial losses and the expense of remedying the vulnerabilities, such security breaches result, in the worst case, in a lasting loss of trust of consumers.
Merging advanced network and improved security
With customer requirements at the heart of their digital transformation journey, the BFSI sector is set to securely pave its way towards adapting innovation. As customers demand more user-friendly ways of interactions, financial institutions will have to view network and security as a single entity in their journey of digital innovation. Managed network and security service providers can offer the agile, secure, and high-performance connectivity solutions, driving growth of the entire financial ecosystem.
To learn more, read this blog on the evolution of networks: VPN, SaaS and the rise of SD-WAN.