Mitigating network outages in the financial services sector

Craig Tavares, head of cloud at Aptum Technologies, reflects on how poor service levels from IT vendors are reflected in network outages and how financial institutions can successfully address this and at the same time future proof their networks.

Banks experiencing IT system failures are a regular occurrence and often seen negatively in the news. In fact, these failures have become so common there is an air of inevitability about them. Operational resilience is crucial in a modern financial system and a key priority for the industry, explaining why billions of pounds are invested in ensuring IT systems are robust and secure. However, something is clearly not working given these regular IT failures.

Financial Conduct Authority figures showed that in 2018, most major high street banks suffered more than ten shutdowns. A Which? Money report also revealed that between April and December 2018, there were 302 reports of IT systems failures affecting customer transactions, equivalent to an incident occurring every single day. Additionally, the same report notes that six of the major banks had suffered at least one incident every two weeks.

There are cost-effective alternatives to static legacy networks

The problem has become so widespread the Bank of England has threatened banks with higher capital charges if they do not appropriately minimize the occurrences of these technical problems. With regulators and politicians breathing down their necks, financial services organisations are in an unenviable position. However, this is hardly surprising given that a system outage can have catastrophic impact and adversely affect customer transactions.

The technology dilemma

While many organisations understand how to address these issues, there are anchors which prevent banking organisations from moving ahead.  IT has several network and application performance blind spots and areas of paralysis which can hold them back.

Take, for example, the financial sector: Financial institutions often have extensive and expensive network legacy systems, not designed for the volume of data or the compliance issues of today. This can lead to business-critical network outages. There are cost-effective alternatives to static legacy networks, but the complexity and cost of migration can seem prohibitive, and so improvements get pushed back..

To get a sense of how well technology can help businesses reach their potential and what vendors can do to improve their service, we conducted a survey of 300 IT decision makers, including those working in the financial services industry.

Uncovering uncomfortable truths

The Powering Potential survey revealed that over half of IT professionals struggle to keep up with the pace of technology, with two in ten saying they had fallen behind the pace of change. Clearly this has important implications, because when decision – makers are not fully informed, mistakes can be made. For instance, 84% of respondents said they do not believe their organisation is currently running IT systems best suited to their needs.  Many respondents (81%) also said that they have been let down by the IT that they have adopted in the past, when it has not lived up to expectations. Is it any wonder we are seeing so many IT outages?

The most common issues for respondents are reliability and not receiving the required service. Alarmingly, just over half say that higher costs are the outcome of implementing technologies that didn’t quite meet organisational needs. Clearly the cost implications can be detrimental and leave businesses with expensive systems that aren’t efficient while also leading to long-term issues such as halting further investment.

Is it any wonder we are seeing so many IT outages?

Within the context of network outages for financial services companies, these findings are indeed sobering. Huge investments are made in technology and yet too often it doesn’t meet organisational objectives. Organisations such as banks also need fast and reliable access to their databases when serving their customers. Financial networks also increasingly need access to cloud services in order to function, which is not an option on private networks.

In another piece of research about SD-WAN, a software designed approach to networking which is often flexible, agile, secure and almost tailor made for most financial institutions, we found that IT decision makers in financial services see the benefits (50%) but the lack of implementation skills (30%), lack of understanding about the technology (26%) and fear of disrupting the business (31%) were inhibiting adoption.

This is a shame, given that a SD-WAN can turn static legacy infrastructure into a more secure and responsive platform, providing insights into, and control of, network traffic and certainly mitigating against network outages. It also enables businesses to interact with customers, when, where and how customers expect, not just when the network allows.

IT vendors letting clients down

Our survey also revealed that 87% of IT decision makers in the sector cite expertise as the most important factor when looking for an IT vendor. That said, both cost and service also ranked highly.

When asked whether the most prominent IT vendor could improve its service, a staggeringly high 63% said there was room for improvement. Tellingly, only 13% said they are happy with current levels of service, while 20% said IT vendor relations require a “lot of improvement.” For IT decision – makers in financial services who are reading this, these findings will clearly resonate, as will the finding that major IT partners can also improve both cost (40%) and product flexibility (37%).

Coming back to network outages, it’s clear that while network technology options such as colocation, connectivity, managed hosting, cloud services and IT managed services exist to address these system failures, financial institutions need more than technology and more than a provider of infrastructure services.

Financial services institutions need vendors that operate as trusted partners that can add an invaluable level of expertise. They need a partner who can ensure network resilience and relegate networks outages to the past. It is this level of canny investment, partnership and service that will successfully reduce network outages and future proof networks to keep pace with, and get ahead of, fast moving developments in the financial services industry.