In the future, businesses that adopt digital infrastructure quickly and use it to its full potential will be in the best position to thrive. This is one of the key lessons of the Global Interconnection Index (GXI) Volume 5. The GXI report provides data about the growth of interconnection bandwidth across the world and applies that data to uncover insights about the state of digital transformation among Enterprises and Service Providers.
According to the GXI, the financial services industry is by far the largest driver of interconnection bandwidth for Enterprises; in fact, it accounts for a staggering 18% of all interconnection bandwidth used by Enterprises and Service Providers combined. We can see why this rapid growth is happening by better understanding how digital leaders in the sector are using interconnection to drive better results across all three components of digital infrastructure: the digital core, ecosystem and edge.
Discover what makes digital leaders successful
Understand the market trends driving digital transformation, what the leaders are doing about it, and the pace at which they are doing it.Get The GXI Report!
Financial institutions are driving modernization at the digital core
In the past, financial institutions relied on mainframes running software from a single vendor, often deployed in data centers they owned and operated themselves. In a digital economy where the most agile and adaptive business generally wins, this fixed approach to infrastructure—with its high up-front costs and long deployment times—is no longer tenable.
Many leading financial institutions talk about being all in on cloud to modernize their digital cores. However, what this really looks like in practice is them moving as much as they can into the cloud, allowing them to decommission some data centers while still running certain workloads with special security requirements on-premises. In short, they’re taking a hybrid cloud approach, which means they’ll rely heavily on direct and secure, private interconnection to make sure the different pieces of their hybrid architecture are functioning as one.
Sustainability is another major concern for financial institutions. From a carbon emissions perspective, there are “sunk costs” involved with continuing to operate traditional data centers that weren’t built using the latest sustainability innovations. Using hyperconverged infrastructure to run applications on fewer servers can help, but there’s a limit to what financial institutions can achieve using the same old data centers.
To maximize agility, enable hybrid multicloud, and set themselves up for a more sustainable approach, many financial institutions are shifting their digital cores into vendor-neutral colocation facilities—like those operated by Equinix.
Infrastructure at the edge is enabling a better user experience
As major financial institutions look to expand their presence across the globe, they’re deploying digital infrastructure to meet customers where they are. This is one reason the GXI report forecasted Enterprise interconnection bandwidth at the edge to grow 57% CAGR by 2024, compared to only 29% at the core.
To provide the best experience possible for end users, financial institutions need to process transactions with extremely low latency, meaning it’s simply not viable for them to route all transactions through the core. To deliver the best user experience possible, they need distributed infrastructure at the edge, allowing them to process transactions in proximity to the customers and devices that initiate those transactions.
Financial institutions are also building out their edge infrastructures to help meet regulatory requirements. Across the world, many governments are passing data privacy and sovereignty regulations that require data to be processed and stored within national borders. In these cases, it may not be sufficient to rely on cloud availability zones. There must be physical infrastructure on the ground in the country, so that regulators can see it with their own eyes.
In electronic trading, firms are deploying at the edge to help ensure highly available, proximate access to key markets. For instance, in Japan, a firm may choose to deploy infrastructure in both a core metro (Tokyo) and an edge metro (Osaka), with redundant connections between the two. This ensures the firm will always be able to connect to critical partners and customers with extremely low latency. The two metros can back one another up to ensure uninterrupted trading, even in the event of an outage.
Ecosystems are helping financial institutions do more in more places
As the GXI data clearly shows, financial services is a group activity. Whether it’s many-to-one (banks and payment companies connecting to one of the major credit card networks) or one-to-many (open banking ecosystems), financial services organizations need to interconnect with thousands of partners and customers quickly, securely and cost-effectively.
The customer data that financial institutions handle could be extremely valuable if it were to fall into the wrong hands. That’s why the industry is a frequent target for cybersecurity threats. Connecting with partners over the public internet is too big of a risk; MPLS is one option to help address risk, but it’s also not cost-effective. Software-defined interconnection—like that offered by Equinix Fabric™—is an agile, high-performance option that allows financial institutions to spin up new secure virtual connections to multiple clouds on demand via a single physical port, without the need for additional physical hardware investments.
As hybrid multicloud grows more important in the financial services sector, being able to connect with multiple partners quickly and securely will become more important as well. One Equinix customer, a large credit card company, has more than 200 virtual connections to its customers in the cloud. Creating that many connections without the help of a partner like Equinix would have been extremely difficult and costly. With Equinix Fabric’s global footprint, they can reach those customers wherever they are in the world, ensuring proximate, low-latency connections.
By deploying on Platform Equinix®, financial services organizations get access to our rich ecosystem of 10,000+ customers, including 1,800+ network service providers and 3,000+ cloud and IT service providers. In addition, we’re adding new partners and customers all the time, so the value our interconnected ecosystem offers will only continue to increase.
Taking the next step in digital leadership
The economy of the future is digital, and leading companies are optimizing their digital infrastructure to thrive in that future economy. For more insights on how financial institutions are modernizing across the core, edge and ecosystems, read the GXI Vol. 5 today.