BANKING ON NEW TECHNOLOGY TO SECURE THE NETWORK EDGE
By Hubert da Costa, Senior VP & MD EMEA, Cybera
When it comes to connecting remote locations and deploying new applications, virtual private networks (VPNs) have been the mode of choice for pretty much all financial services organisations. However, as the data landscape has evolved and with financial services organisations becoming increasingly decentralised, it has become clear that VPNs can no longer deliver the benefits for which they were originally intended.
Today’s typical IT infrastructure comprises big data, mobility, cloud, Internet of Things (IoT), and more. It continues to extend the enterprise perimeter, and as new applications are required by distributed locations, the cost and complexity of adding more VPNs to secure them ramps up considerably.
That’s why more and more organisations are turning to innovative, multi-layered security solutions to secure and protect assets. This is where Secure Software Defined Wide Area Network (SD-WAN) for the Network Edge has come into its own. Secure SD-WAN at the Edge puts the power and security of the compute resources as close to the sources of data as possible – i.e., at the network’s edge – near where the work is actually being done. The power of secure SD-WAN Edge lies in taking a defence-in-depth approach while at the same time decreasing the enterprise attack surface by logically segmenting the network on a per application basis. Additionally, this multi-layered security methodology is offered with the architectural simplicity, scalability, reliability and significant cost savings of a virtual overlay network.
The majority of those responsible for data security in today’s increasingly distributed financial services organisations know only too well the challenges that lay with traditional connectivity solutions, such as VPNs:
- Complicated Deployment/Management – Connecting new locations and new applications is hard. Each location may have multiple devices, different device configurations and various security requirements. Turning up a new location on a VPN requires experienced IT staff to deploy, manage, troubleshoot and support. Today’s increasingly decentralised financial services ecosystem means security configurations may be deployed and/or managed by anyone from a highly trained professional to a novice. This opens-up edge compute locations to the possibility of misconfigurations or inconsistent configurations, and consequently, dangerously vulnerable to security risk.
- Costly –The capital expenditure for acquiring, deploying, managing and supporting various point solution hardware, public IP addresses, and software continues to rise. In addition, the cost to hire and retain highly skilled IT professionals capable of managing the entire infrastructure – from HQ to the remote sites – is increasing. And, when such skilled professionals are tasked with managing and putting out fires in this area, it takes them away from activities that could more directly impact competitive advantage, profitability and shareholder value.
- Rigid– Adapting to changing network needs, turning up new applications, or responding to new security threats, such as ransomware, malware and spoofing, must be automatic or rapidly executed to ensure security and business continuity. Traditional connectivity measures are inflexible and require labour-intensive efforts to execute and manage adequately.
Straightforward and Uncomplicated
As financial services organisations continue to decentralise, and more business data is created and utilised at the network edge, a straightforward, uncomplicated solution to securely connect and manage them is required.
Secure SD-WAN Edge technology streamlines enterprise networks and significantly reduces the capital and operational expense of managing enterprise WANs. Secure SD-WAN Edge technology effortlessly extends the multi-layered security defenses utilised in corporate data centres to branch locations and remote ATMs. Most importantly, secure SD-WAN Edge allows mission-critical infrastructure such as ATMs and electronic card readers to co-exist with public applications like Wi-Fi on a single network while providing application-specific security and end-to-end network segmentation. These applications are segmented into their own dedicated logical networks, preventing them from intermingling with other application traffic on the network.
With secure SD-WAN Edge solutions, these applications are connected in a cost-effective, scalable way without compromising security. This is a distinct benefit over VPNs, which provide an either/or scenario: either all traffic intermingles on one VPN, which is lower cost but very insecure; or all traffic can be segmented on separate VPNs, which requires more cost and complexity to maintain security.
Virtualises the WAN
Secure SD-WAN Edge virtualises the WAN so that all network intelligence is handled in software.
For example, remote locations can be defined simultaneously and then kept perfectly in sync using centralised cloud-based policy administration inherent in SD-WAN Edge connectivity models. This groundbreaking architecture helps reduce expenses and complexity, while increasing network flexibility. Best of all, it can be piloted in your network incrementally on a branch-by-branch basis, mitigating concerns about network disruption, and giving you a quick way to determine the return on your investment.
Where to start?
Here are the high- level steps for financial organisations that wish to commence their secure SD-WAN Edge journey:
- Identify and engage all key stakeholders in creating and/or approving the Strategy & Program (IT, security, legal, regulations compliance, C-suite)
- Develop a data connectivity and security program for HQ, as well as your remote locations
- Do your homework – explore multiple solutions and vendors, seek guidance from trusted partners/advisors
- Narrow your search, conduct POCs (proof of concept testing)
- Once chosen, roll-out incrementally on a branch-by-branch basis
Top banking trends of 2023 and global outlook of banking and fintech for the year ahead
Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School
You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:
Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.
Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.
Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.
Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.
Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.
The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.
Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.
The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.
I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.
Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.
Will ‘Britcoin’ change the way we bank?
The Treasury and Bank of England recently announced a state-backed digital pound is likely to be launched in the UK later this decade, following the popularity of cryptocurrencies. However, the ‘Britcoin’ will be backed by the central bank, ensuring the digital pound will be much less volatile than its sister, cryptocurrency. Could a digital pound backed by the central bank be the answer to utilising technological developments in the finance system for the better?
Ross Thompson, Accountancy and Finance Lecturer at Arden University, considers what we can expect from ‘Britcoin’, how this will impact consumers, businesses, and the economy, and whether ‘Britcoin’ could be the revolution to restore our confidence in the banking system.
Trust in our financial system hit an all-time low post the 2008 financial crash. Even ten years on from the collapse of Lehman Brothers, a survey found 66% of adults in Britain still don’t trust banks to work in the best interests of society.
This means there remains to be apprehension for people to sign up to and use a bank to help manage their money. The UK doesn’t seem to struggle too much in this arena, however, as according to the Financial Conduct Authority (FCA), most UK consumers (96%) have a current account from a bank or building society. Regardless, there is still a significant number of adults who do not have a bank account or are what is known as ‘unbanked’.
The lack of trust plays a big part here. More people want better control over their money and to cut out the middleman, hence why cryptocurrencies and blockchain became a tempting option, as it can potentially remove the need for banks for any transactions. However, the volatility of these currencies has been a cause for concern for many investors and regulators.
Blockchain and cryptocurrency are gaining more traction and are becoming more of a viable option for businesses, especially due to talks of regulations coming into fruition. This is especially true with cryptocurrency, with the government announcing crypto assets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to.
The “Britcoin” aims to solve the issues traditional Bitcoin presents. It would be backed by the central bank, which would ensure its stability and reduce its volatility, making it a more attractive option for investors and providing greater confidence in the stability of the financial system. Britcoin will be as stable as the inherent stability of the British economy and political system. It would also provide an opportunity for the UK to stay at the forefront of technological developments in the finance system – a system in which it can sometimes be slow to react.
One of the key benefits of a digital pound is that it would be much faster and more efficient than traditional banking systems. Transactions could be completed almost instantly, regardless of where the parties involved are located. This would make cross-border transactions much easier and could even help to boost international trade.
The Bank of England’s Governor, Andrew Bailey, stated: “a digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability”, pointing toward the other advantage of a digital pound. It would offer more security as transactions would be recorded on a distributed ledger, which would make it much more difficult for hackers to tamper with the system. It would also provide greater transparency, as all transactions would be recorded on the ledger and could be easily traced if needed.
However, there are also some potential drawbacks. One concern is that it could lead to a reduction in the use of cash, which could have implications for those who do not have access to digital technologies or who prefer to use cash for privacy reasons. There are also concerns that a digital pound could be used for illicit activities, such as money laundering or terrorism financing. On top of this, more details are required in relation to the levels of personal account privacy; the potential to usher in ‘big brother’ banking systems is a growing a concern regarding state digital currencies.
Around 85 central banks are currently engaged in projects to create digital currencies, according to figures from the Bank for International Settlements. But as it stands, many feel there is probably little need for a digital pound; with a growing amount of people using their debit cards, phones and watches to fulfil the same function, a digital pound is deemed unnecessary. On top of this, many of the public fear that a government digital currency could potentially infringe on their privacy – despite the BoE stating the currency would be subject to rigorous standards of privacy and data protection.
And in countries where a digital currency has already been established, there has been little uptake – widely due to the lack of trust between central banks and citizens. It seems gaining users’ confidence should be the Bank’s first priority. The House of Lords economic affairs committee stated last year that a digital pound would pose “significant risks” such as state surveillance, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny and could be exploited by hostile states and criminals; it is safe to say that the nation’s ‘Britcoin’ will need to be very well thought out.
It has the potential to revolutionize the finance system, however, and could provide significant benefits to investors and consumers alike. However, the potential risks and drawbacks must be carefully considered before any decision is made to launch such a currency. Having said that, if it is implemented correctly, a digital pound could be a powerful tool for utilising technological developments in the finance system for the better.
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