The new data centre in the financial services industry

The data centre has always had a crucial role to play in retail financial services. However, with the advent of technologies such as virtualisation, cloud and software defined infrastructure, what was once considered a cost centre is now being transformed into a hub for profit

By Guest on 04 December 2015
The new data centre in the financial services industry

This article first appeared in the Autumn 2015 issue of OnWindows magazine.

For a long time, the data centre has been the heart and soul of IT in retail banking, playing a key role in ensuring the smooth running of operations and facilitating back-end processing. However, while banks rightly recognised it as a necessity, it was also seen as expensive and high maintenance.

Some examples in the last few years, according to Financial Times, are JPMorgan Chase, spending US$500 million on each of its two large data centres, as well as Spanish Bank BBVA which has spent an average of €850 million a year between 2011 and 2013 getting its data centres and software development up to speed.

These are significant investments but they are starting to look even more important as banks are realising that yesterday’s cost centre is the profit centre of today. They are increasingly finding significant value in the data they have been storing for years, and are using new tools and solutions to analyse a whole host of data, including outside data such as social and transactional sources. The way data is managed is evolving too, open source software packages that provide a foundation for the so called big data are making it possible for the banks to use much larger and more diverse data sets. Today’s optimised data centres make far better use of hardware and software, enabling banks to do significantly more with significantly less. Intel has been at the forefront in virtualisation technologies for more than a decade and is now leading the way in the next step in this regard – using software defined infrastructure (SDI) to transform the data centre into consolidated, energy-efficient data centre facilities containing open-standards based, agile and ­cost-effective systems.

The benefits of such systems are significant. They can help to reduce capital expenditures in two ways. First, the use of ­industry-defined open standards and protocols limits the dependency on proprietary hardware and software. Second, cloud and virtualisation technologies increase the utilisation rates of IT assets, helping manage costs for overprovisioning for worst-case demand situations and providing increased flexibility that helps turn data centres into profit centres.

SDI offers operational efficiencies for all three pillars of modern data centres: compute, network and storage resources. Storage and networking is a significant focus area for us at Intel. SSDs are a significant and growing business for us, as is networking. Automating resource management and provisioning will reduce the number of specialists needed, simplify monitoring and manageability, and expand self-service capabilities to improve quality of service and meet service-level agreements.

What’s more, SDI enables us to allocate infrastructure resources according to business needs, applications requirements and infrastructure mapping, optimising both IT value and user experience. This helps to increase overall flexibility and agility. There’s also less need for specialised knowledge. Open interfaces increase the speed of integrating the infrastructure domain. As we evolve to SDI, we can reduce our spending and our dependence on proprietary hardware and software specialists, and other support.

In short, SDI will help banks to reduce costs, eliminate storage and network bottlenecks, and leverage immediate scalability benefits. It’s more flexible too – users can deploy virtualisations and then copy and spread the data to remote data centres far more effectively.

There’s no doubt that this is the future. According to a recent research report by MarketsandMarkets, the total SDI market is expected to grow from US$21.78 billion in 2015 to US$77.18 billion in 2020, at an estimated compound annual growth rate (CAGR) of 28.8%. Together with the launch of Hadoop, Cloudera, Cortana and other associated software, it is facilitating a future with endless possibilities for the financial services industry.

Let’s use retail banking and insurance to illustrate how a modern data centre opens doors for additional profits for the line of business decision makers. For retail banks it not only enables more tailored product offerings and hyper targeting thanks to a far better understanding of the customer, but also helps them to improve the way they analyse and tackle fraud, more effectively meet regulations and manage risk. The same can be said for insurers, who are also able to use big data for novel, more inclusive actuarial models such as those based on sensor feeds in property and casualty insurance industry.

These are exciting prospects – and it seems that there are no limits to the potential that SDI and big data analytics technology can offer. I have no doubt that, thanks to all of this, the future of the financial services industry will be very different to what it is today.

Dejan Kusalovic is director of marketing at Intel

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