Blog · 24 Jan 2018

How SDN and NFV bring innovation to financial markets

Find out why financial markets stand to gain more than most from technologies such as SDN and NFV.

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Chief technology officer, future networks

Technologies such as SDN and NFV have helped to transform organisations around the world.

Financial markets, however, stand to gain more than most from these innovative solutions. In this article, originally published in Financial IT, Chief Technology Officer of Future Networks here at BT, Winston Carrera, explores the potential.  

By and large, the financial services sector has typically taken a DIY approach to technology. CIOs have decided what to use, bought multiple products from a host of different vendors and stitched them all together. The result is today’s hugely complex IT infrastructures — even more so when you take into account the impact of organic expansion and M&A activity on the estate. As a result, keeping all the plates spinning requires major ongoing investment in technology and big teams of IT specialists.

However, as tighter regulation requires banks to hold more capital, IT procurement habits must change. Running huge IT teams is no longer sustainable but making do with fewer people can only increase the risks associated with delivering, securing and operating a network. The CIO must realign IT spending. The good news is that adopting SDN and NFV technologies to introduce more automation into managing the infrastructure will not only help to reduce risk but also open the door to technological and commercial innovation.

Simpler, faster, cleaner infrastructure

Hardware virtualisation (replacing physical devices with software equivalents) has increased deployment velocity, flexibility and portability of applications in the computing environment. Now, using SDN/NFV, the CIO can have a network to match. When installing or moving an application from one location to another (to access a new market or connect a new client), for example, it will no longer take weeks or months for new connections to be provisioned or a firewall installed.

It’s time for financial services CIOs to view internal network services more like products, and not just technology. Treating network services as products allows processes and business rules to be choreographed alongside the technology, so that delivery is seamlessly orchestrated. Choreography and orchestration should extend to network service provider resources in the same way as internal services. The way to do this is with an API (application programming interface) gateway that governs interaction with the service provider systems. An API gateway gives flexible control of the allocated resources in the service provider’s network.

Another advantage of SDN/NFV is that it helps mitigate operational risk, by reducing the number of human touch points and, in some cases, by removing people from the process altogether. Applications can automatically request the network resources they need and connect to the counterparty or exchange according to business rules. Access to services is speeded up and ultimately the user gets a better experience along the way.

Proximity hosting, where connectivity infrastructure and/or systems in third party data centres are co-located, reduces the need for multiple WAN connections. Substituting these with local cross connects enables aggregation and has a positive effect on performance through reduced network latency. How do you maintain flexibility if all your eggs are co-located in one basket? By adopting a multi co-location strategy and interconnecting via a high bandwidth SDN/NFV-enabled third party network, which provides ultimate portability of network services.

Commercial innovation

Any IT expenditure must meet not only the requirements of the IT department but also demonstrate an acceptable return on investment for business. It has not always been easy to reconcile these two worlds. Adopting SDN/NFV principles can support the business technology journey with commercial options that provide a clear projection and comparison of costs, value and features.

Typically, the commercial assessment of a network is based on static requirements and modelling future demand. But increasingly, in today’s digital world, the landscape can change dramatically in either direction, and in a very short space of time. SDN/NFV take us nearer to the Holy Grail of network services of on-demand bandwidth, full user control of policies plus use-based pricing (time or volume). Commercially decoupling ports from bandwidth is a good example. The customer orders network ports which are permanently connected to the network platform, so the organisation can consume network bandwidth when it’s needed. In other words, everyone gets capacity when they need it and only pay when they use it — the Network-as-a-Service model.

Overall, the industry is moving towards flexible commercial contracts that let the business get more resources fast and not miss out on an opportunity because of concerns over the cost.

The future

This is an exciting time for financial services companies, as SDN/NFV creates huge opportunities for CIOs to create the secure, agile and responsive infrastructure their users need now and for future innovation. For example, we can envisage scenarios that leverage SDN/NFV technology and techniques such as the synchronisation of business clocks for Time-as-a-Service, or packet acquisition, inspection and correlation for Analytics-as-a-Service.

Creative commercial thinking will accelerate adoption of SDN/NFV and support the financial services sector to meet regulatory requirements and continue to lead in the deployment of technology for competitive advantage.

Find out more

Of course, taking advantage of these opportunities isn’t something to be taken lightly. It takes time and expertise to make the most of these technologies — and that’s something we can help you with.

 

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