What edge computing will do for banks

Edge computing, where computing power shifts away from centralised networks and processing data happens closer to source, is set to propel banking services and operations into the future

As the number of internet of things (IoT) devices glides past the one billion mark globally, the need for banks to target mobility as a strategic priority has never been greater. And partnering new 5G capabilities with edge computing is likely to be chosen method to do so.

By 2022, 50 per cent of enterprise data will be created and processed outside the datacentre of the cloud, and by 2025 the number IoT devices is likely to have reached a staggering 100 billion. Improving speed of service and reducing latency is the only way to mitigate challenges of increased data at the edge.

However, living life on the edge may be more of a natural transition for the finance industry than it initially seems.

Banking has been using edge computing for some time already

“Financial institutions have a long history of edge computing, although it may not have been classified as that in the past,” says Stephan Fabel, director of product at Canonical, the company responsible for the Linux operating system behind Ubuntu.

“ATMs, banking apps and stand-up branches have all previously incorporated elements of edge processing. Reducing the cost associated with maintaining these edge sites, therefore, will be a key factor in driving more holistic edge solutions, especially with financial institutions managing global fleets.”

Mr Fabel pinpoints bring-your-own-device or BYOD banking, the prevalence of banking services outside of the traditional bank and the vast amounts of data being processed outside datacentres as additional contributions to the overarching demand for reduced latency and improved edge cloud solutions.

“Only by reducing network latency can the next generation of customer-facing services be realised within bank branches, at ATMs and point-of-sale services,” he adds.

“There are examples of financial institutions already adapting and incorporating better infrastructure to support such new ideas, however. Take Capital One’s new cafés, for example, which allow expert banking systems to be accessed remotely, including the determination of credit worthiness, loan applications and fraud detection.”

How edge can bring banks closer to their customers

Canonical’s history of model-driven operations has long assisted scaling challenges associated with edge deployments. The company, and Mr Fabel himself, have therefore seen first-hand how edge computing can bring power closer to the customer and how pivotal this notion is for the financial services industry.

“It enables use-cases such as robotics, computer vision and machine-learning to impact the end-user directly, both to enhance the experiences they’re already accustomed to, like in-store or in-bank offerings, but also those that have not yet been realised,” he says. “The investment arm of banking, in particular, will look to capitalise on this opportunity, using advanced analytics, enabled by artificial intelligence and machine-learning, to process huge amounts of data on the edge, and better predict market behaviours.”

To capitalise on and adapt to the trend, Ravi Naik, chief information officer and senior vice president of corporate strategy at Seagate Technology, agrees and emphasises the key word to focus on is “data”. Mr Naik believes only by focusing on the flow, security and provenance of data can the financial sector truly engage and orchestrate within existing means of regulated business sectors.

“As financial institutions transform their business models, there is an increased need to adopt distributed data models,” he says.

If harnessed effectively, “we believe there are three main disruptive opportunities with the edge”, he continues. “Intelligence translating to improved and tailored customer experience; backhaul avoidance using white-box commodity hardware to virtualise the network and allow for infrastructure to scale cost effectively; and the ability to containerise applications and bring CI/CD [continuous integration and continuous delivery] and agile software development into multi-tenant environments.”

Digital technology is the linchpin of customer experience

Regarding orchestration, the sector could do a lot worse than to follow the Commonwealth Bank of Australia’s lead and learn from the telecommunications industry’s own transformation to incorporate 5G networks.

Cloud-native deployments for next-generation banking services, those available at edge sites or ‘micro-branches’, bring an expansion of infrastructure platforms most frequently seen in a telco context,” says Mr Fabel. “High resolution data, for example, is increasingly captured at the edge, before being transformed for suitable transmission to a central cloud. After that, even more compute-intensive processes are undertaken.”

To manage this complexity, hyperscalers and telcos are looking at cloud-native and micro-service-based application deployment patterns and the containerisation that comes with them.

“In short, it is flexibility at the edge which is the most important aspect of any edge roll out, for telcos or banks,” says Mr Fabel.

Mr Naik agrees, alluding to this flexibility’s influence on overall customer experience. “Digital technology is the primary way in which stand-out customer experiences are delivered,” he says. “Choosing or changing a financial services provider is easier than ever before and a misstep in customer experience can leave long-term relationships at risk.

“Edge computing is, in its simplest terms, a way of ensuring data gets to where it needs to go faster, more reliably and, most importantly, more securely than before. This will become a key component for financial services firms that are not only looking to deliver the experiences many customers have come to expect, but are ultimately stewards of their customers’ most private data.”

Commonwealth Bank of Australia

At the 2019 Mobile World Congress in Barcelona this February, financial services’ foray into the realm of edge computing was given a significant nudge courtesy of the Commonwealth Bank of Australia.

An announcement at the event confirmed that, in collaboration with tech giants Telstra and Ericsson, 5G edge computing would be trialled and explored as the first venture of its kind in the sector.

“The trials are expected to showcase what the bank branch of the future might look like and how 5G edge computing can help to reduce the network infrastructure currently required at individual bank branches,” Telstra says.

The telco adds that the trial’s intended outcomes would be to “explore optimal 5G coverage solutions and provide more flexibility for bank operations and locations”.

The Commonwealth Bank of Australia echoed these sentiments from the perspective of enhanced customer service. Levels of availability, stability and performance of the bank’s network infrastructure were all listed as part of its now 5G and edge computing-driven ambition to provide a more complete digital experience for customers.

“5G edge computing is all about bringing the network closer to the user or application,” according to Nikos Katinakis, Telstra’s group executive for networks and IT. “For financial institutions like Commonwealth Bank, it will help to enhance existing banking applications as well as deliver new use-cases such as artificial intelligence, all supported by a range of software-defined networking solutions.”