05.24.2016Enterprise Tech

Banking on SD-WAN

By: Jeffrey Granvold
KDDI Japan customers will use VoLTE service

Over the last several years IT departments have experienced a dramatic change in how they support the increasing demands placed on their Wide-Area Network (WAN). This change came not as a passing trend in network management; but rather, it was driven by the rise of the Internet of Things (IoT).  Today, workloads associated with smart cards, ATMs and branch kiosks, along with potential workload from wearables, retail loyalty programs and data mining, are ushering in the era of IoT in the financial services industry.  In fact, IDC estimates that between 2014 and 2017 IoT workloads will grow750%[1].  This continued proliferation of workloads will have a dramatic effect on network architecture – creating the perfect fit for Software-Defined Wide Area Network (SD-WAN).

SD-WAN moves both control and monitoring from physical devices (routers and firewalls) to an intelligent software overlay that routes workloads across both public and private networks.   This overlay allows for increased flexibility, and greater intelligence to automate and prioritize traffic based on various network types (4G, LTE, DSL, MPLS). The intelligence found within the SD-WAN solution chooses the best network path for the particular workload. It provides greater efficiency in workload management and creates a new way of thinking about how to deliver products and services to financial customers. It also provides the proper foundation for IoT solutions. For example, the bank network team can create an IoT policy based network path using SD-WAN that can deliver encrypted workloads to network paths where the IoT applications reside.

Here’s a hypothetical example of how SD-WAN and IoT collide in a financial services setting:

Picture a personal health and financial assistant app found on the latest wearable device that combines fitness with banking. We’ll call this hypothetical app BankFit. The app lets the user create fitness and personal finance goals and tracks activity, nutrition, spending, saving, etc. The user can also make purchases and conduct banking transactions from this app. Users set up and complete milestones on a weekly/monthly basis and receive banking rewards (checking to savings account transfers), special offers geared towards both health and fitness, etc. This is a pretty standard IoT example.

Now here’s where the SD-WAN picks up. The BankFit interface sends sensory data from the users’ body, his/her movements, GPS data, etc. to the Gateway – the point of data collection for all BankFit interfaces. The Gateway seamlessly collects and performs data analytic functions. This workload traffic will then be assigned a specific network via the SD-WAN centralized network policy.

SD-WAN impacts the application layer as well as the network. The application layer has one of the most complex tasks in the IoT journey. It involves ingesting and processing all of the information collected from a connected device in real-time. Not all information that comes from a connected device is going to cross over the same network path (Internet, 4G, MPLS) or end up in the same data center.   Keep in mind that the world of IoT is a hierarchical system of data and information. In the example of BankFit, specific data such as the calorie goals, tasks, healthy activities, heart rate data, etc., will be processed via one application while banking information, requests, transfers, will function within the banking systems process. In order to make this one seamless transaction, the applications will be sending/receiving information asynchronously via different network paths.  These paths can be based on latency or the security needs of the transaction.  This is precisely where the investment in SD-WAN will pay off. The built in intelligence in the SD-WAN manages the entire process seamlessly – including aspects like security and encryption, which are core to IoT adoption.

While standards on the cross section of IoT and SDN/NFV are currently being defined it is clear that banks should be concerned about the privacy and security considerations. Banks will need to work with standards bodies to establish a trust framework for IoT that ensures the user is in control of their privacy and complies with international IoT security standards for global interoperability. And actually IoT – specifically wearable devices – can provide security and encryption in a new way for financial services companies and others. Consider the benefit of human uniqueness.   By establishing the user as the security device with credentials embedded they themselves become their own IP address. This allows for access to banking systems with less system intervention and in turn provides a much higher security posture than what exists today.

IoT in financial services is growing at an exponential rate as more companies figure out how to best leverage IoT technology to better serve customers. Moreover, the flood of IoT transactions is placing such significant demands on data centers and remote sites now that the costs of meeting the demands with traditional WAN topologies are impossible to sustain.

SD-WAN, as part of the evolution in automated network intelligence and dynamic control, provides the flexibility that is essential for achieving market leadership especially as the market itself is changing.   It is recognized that retail banks will need to work with trust frameworks to ensure privacy policies are established and maintained. These frameworks also establish IoT as a benefit for more banking automation through wearable devices based on security control established by human uniqueness.  If your financial institution is not thinking of these things – IoT for banking supported by SD-WAN – you will have to play catch-up to your competitors. Where will your network be in 2017?

For more information on Verizon’s SD-WAN capabilities, visit: http://www.verizonenterprise.com/solutions/integrated-managed-services/managed-services/sd-wan-services/.

[1] Source: IDC., Data Center Investments Critical to Internet of Things Expansion, IDC Says. http://www.idc.com/getdoc.jsp?containerId=prUS25580215