IMPROVING CYBERSECURITY; USING BIG DATA AMONG TRENDS TO WATCH

A customer-centric approach to business results in a greater presence in all areas of financial technology (FinTech) services such as product development, consumer demand models, and cybersecurity risk management. With these demand requirements, technology budgets must be put in place so the funds can be directed to service innovations the consumer expects.

Customers are increasingly demanding access to more services through their mobile devices such as balance inquiries, mobile payments, and more complex transactions. If banking companies want to stay relevant in the financial services industry, they must be able to provide services for all forms of mobile and wearable devices. To do so, the following trends must be considered by FinTech IT leaders:

1. Increasing Demand for Mobile Banking and Payments

Consumers are using their tablets, smartphones, and wearable electronics in new ways with growing expectations for connectivity and access. The statistics concerning the ubiquity of the smartphone and other mobile devices from the New York State Department of Financial Services’ 2014 report on cybersecurity in the banking sector reveal nothing but growth:

• Fifty-two percent of smartphone owners with a bank account used mobile banking
• The most common use of mobile banking (94 percent of users) check account balances or recent transactions
• Transferring money between an individual’s own accounts and receiving alerts from their bank are the second (61 percent)- and third (57 percent)-most common uses of mobile banking users

The speed of data delivery across mobile devices is crucial as consumer patience for downloading data is minimal. FinTech executives need scalable, point-to-point data transport to keep up with demand. These officers should consider data centers with dedicated Layer 1 and switch-based Layer 2 services; speed options ranging from FastE to 100 GigE; and access to hundreds of networks and carriers.

2. Improving Cybersecurity for Mobile

Accommodating mobile banking and payments increase the amount of data that financial companies have to provide and protect. Cybersecurity now ranks among the largest IT expenses at U.S. banks with most expecting costs for this to increase in the near future. Most financial service firms are not adequately equipped to provide new capabilities, yet 27 percent of executive leaders rank cyber risk as their top priority, according to a recent BankDirector.com report.

While the focus is often on security breaches by remote access, data centers can be attacked physically. Such physical breaches can result in the theft of valuable data as well as physical assets, which can lead to costly downtime. FinTech businesses are finding it easier to relegate physical security to data centers as opposed to maintaining their own large IT security departments.

Colocation providers can effectively and efficiently provide best-in-class data center security because they offer data center management as part of their core competencies.

When reviewing colocation service providers, look for:

• On-site data center security guards – 24/7, year-round
• Video surveillance and recording of the exterior and interior of each facility
• Biometric and key-card security for rigid access control
• Turnstile doors to prevent tailgating
• Reinforced physical structures including concrete bollards, steel-lined walls, bulletproof glass, and barbed-wire fencing
• Flexibility to have custom security features

3. Increased Pressures to Control Cyber Threats

The past few years have seen a greater increase in state and federal guidelines and regulations developed in an attempt to curb cyberattacks. These include FFIEC examination manuals and guidance, FDIC, Federal Reserve, OCC, SEC, and FINRA guidance as well as state regulatory guidelines from the CSBS.

Costs associated with cybersecurity threats such as the retention of external consultants and vendors as well as the hiring and training of experience staff to develop and maintain the best possible defense against cyber threats impacts profitability.

While many information security regulations apply at the application level, infrastructure provisions applicable to the financial services regulation do exist. If a financial services company decides to host data offsite, they should look for a data center services provider that is fully certified with SSAE16, TIA 942 Top Tier, and PCI-DSS.

4. Expecting Big Data to Determine Best Practices

Big data has become a fact of life for financial companies in an era when demand from mobile services exponentially increased the amount of data that needs to be processed at any given time. Since banks manage somewhere around 1.9 petabytes (1.9 million gigabytes) of data, the ability to manage that data efficiently and cost-effectively is critical.

One of the ways data center colocation enables the management of big data is by allowing FinTech companies to turn capital expenditures into variable operational expenditures; a flexible colocation agreement that allows the financial firm to scale up or down as needed.

Given that financial services companies are managing large volumes of customer and transaction data so their customers can access their information where, when, and how they want, these companies can’t afford for their systems to go down. For most financial service firms, 100 percent uptime is easier and more cost-effective to achieve in a colocation environment where they can get a high-density/high-availability, future-proofed data center environment. Be sure to look for a colocation provider that offers:

• Power and cooling architectures that utilize advanced components and are designed with N+1 and 2N parallel redundancies
• Meshed design that provides a higher degree of resiliency versus other solutions on the market with no single point of failure
• Cooling or electrical systems that can withstand a loss of two legs, yet the systems are still 100-percent operational
• Distributed redundant electrical design, which allows for multiple levels of redundancy within the same data hall

5. Standardizing and Deploying IT Resources

Colocation enables financial companies to scale infrastructure capacity quickly and efficiently to manage large volumes of customer and transaction data, which allows mobile applications and services to market faster. Scalability is also a critical driver of the cost savings associated with data center colocation.

One of the benefits of consolidation with colocation is the economy of scale. Since an enterprise colocation data center builds and operates data centers at a much larger scale than most financial service firms would in-house, it allows the costs to be optimized both in construction and purchase of power.

6. Increasing Customer Satisfaction

As mobile services continue to expand in the kinds of features available through mobile applications as well as the reach of mobile devices, financial companies will have to run to keep pace with consumer demands. Consumers are no longer maintaining life-long loyalty to one band and will switch to another if the FinTech services are better.

Improving FinTech services such as mobile and online banking is much easier to do when a company can scale quickly and efficiently with a colocation services provider than when that investment is otherwise engaged with scaling infrastructure in-house.

Ideally, financial companies should have data centers that are a best-fit solution, meaning they grow and adapt as the firm’s needs evolve. To ensure your company’s needs will be met easily, look for:

• Secure, shared infrastructure that can deliver lower costs and faster responsiveness when a financial company needs to change power or size requirements
• Low to high-density solutions that are tailored to the rack level
• Power redundancy tailored to the rack level
• A flexible contract so financial companies can grow into purchased power and space over a given time period

In today’s connected environment, consumers expect to do just about anything from their mobile devices – especially accessing online banking from their smartphones. FinTech service firms must stay ahead when accommodating consumer demands, yet most don’t have the scalable data storage capacity or best-in-class cybersecurity they need in-house to do so.

While U.S. banks are significantly increasing their FinTech products, consumers are steadily moving away from traditional banking resources at a dramatic pace. According to a Gallup Poll, almost one in four banking customers are using online channels more frequently, while 13 percent report they have been using mobile banking since 2011. In contrast, 50 percent of customers are visiting a branch less often and 46 percent are using call centers less often.

Meet the mobile banking demands of your customers by using a colocation provider with scalable storage and best-in-class security.

Photo: Pixabay

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