From longstanding features such as online banking, to the implementation of emerging technologies such as blockchain, the finance industry has always had a fairly tech-forward mindset. Now, with IDC highlighting the financial world's widespread move to software-defined wide area network (SD-WAN) technology, the sector's willingness to utilize bigger, better things has surfaced again.
A growing number of banks, credit unions (CUs), and other financial organizations have used the technology to hedge the move to cloud solutions, and more companies are certain to follow as they discover a greater need for stability, uptime, and performance.
Let's take a look at some of SD-WAN's top drivers in finance, including the technology's ability to positively impact IT efficiency, network performance, and business value.
Bandwidth Optimization Capabilities
IDC noted that the ability to optimize bandwidth — including traffic from relatively bandwidth-hungry cloud communication solutions — is a leading driver for the move to SD-WAN technology, with 36 percent of respondents citing this capability as a motivating factor. This finding reflects a core capability of SD-WAN and highlights the industry's ever-increasing reliance on cloud tools and services. Since growing bandwidth needs come with increasing bandwidth costs, any tool that allows organizations to do more with less has immediate allure.
A baseline understanding of SD-WAN's capabilities helps illustrate the solution's value to finance. It leverages connectivity options, including private circuit and public broadband, as a single pipe, continually searching for the best path as it carries packets across the network. This stands in contrast to traditional networking, which has little ability to prioritize the data it carries.
This capability can affect a marked increase in quality of service for sequence-sensitive real-time data, such as VoIP calls and video conferences. Moreover, it allows financial institutions to move to lower-priced bandwidth products, all without sacrificing quality or consistency.
Measuring these benefits against the finance industry's need for consistent communications and love of savings, it's easy to see why the technology has seen such widespread adoption. Distributed organizations such as banks and credit unions can realize significant combined savings by switching to lower data packages at multiple locations. Meanwhile, rural bank and CU branches can use SD-WAN as a stepping stone to improved communications. Instead of being limited to the options their suboptimal connectivity solutions allow, the technology enables them to utilize the same cloud-based tools as their urban counterparts.
Finance is a unique industry with a diverse number of business distribution models. Many such models carry complex, delicate networking needs. Combined with the industry's always-on nature, these factors can turn small disruptions into disasters — and make any change that breaks the complex dependencies of the average institution's network a no-go.
It's unsurprising, then, that 28 percent of respondents to the IDC survey cited the ability to keep existing architecture as a major concern. Whatever combination of solutions a financial institution employs, SD-WAN can go over the top, providing the unique benefits mentioned above without significantly altering the way the network operates.
This is especially important considering SD-WAN's reputation as a replacement for multiprotocol label switching (MPLS). Despite this popular belief, a hybrid WAN utilizing MPLS and SD-WAN technology offers organizations the best of both worlds: a private circuit for the apps that need it and cloud-based WAN for tools that are better suited to public networking options.
Here, banks and credit unions provide another excellent proof of concept. Because different locations rely on different connectivity options, a tool that combines multiple options into a single pipe gives these organizations greater control over cloud solutions utilized across the enterprise. If your organization is reticent to change an aging network due to dependencies or uptime concerns, SD-WAN can help.
When networking solutions automatically move to the next-best source in the event of an outage, it's that much easier to rebound. No more worrying about a network hiccup taking the bank's walk-in operations out for 15 minutes while IT scrambles to get things back online.
Self-Provisioning Tools and Automation
As mentioned above, most financial organizations are distributed. While the advent of cloud and other technologies has made it easier than ever for these entities to operate as a cohesive unit, they also represent a significant challenge for IT teams — and, if managed improperly, can become a large source of operational and financial inefficiency.
Therefore, the advantages that make SD-WAN great for companies with complex requirements or unique networking needs also make it a perfect fit for distributed financial organizations. Twenty-eight percent of respondents to the IDC survey cited the technology's affinity for "improved automation and self-provisioning" — in other words, the ability to manage and view the WAN as a singular entity instead of treating each endpoint as a standalone resource — as a driver.
Though credit unions and banks come to mind anytime remote distribution is mentioned, any institution in a period of growth stands to benefit from this concept. New branches can be added to the WAN with ease, cutting back on one-time implementation costs and ongoing maintenance. Better, the technology's single-pipe networking approach mitigates the impact of disruptions. When networking solutions automatically move to the next-best source in the event of an outage, it's that much easier to rebound. That means no more worrying about a network hiccup taking the bank's walk-in operations out for 15 minutes while IT scrambles to get things back online.
SD-WAN Technology is a Perfect Fit for Banks, CUs, and other Financial Institutions
Ultimately, the benefits of SD-WAN are too many to ignore. The IDC's findings merely validate this fact. For finance, the technology represents a best-case scenario in areas that matter: communication quality, network performance, and financial efficiency, among others. Combined with automation and centralization capabilities built to benefit distributed organizations like banks and credit unions, you have a tool that fits the industry so well it could've been purpose-built for it. If your organization is ready to modernize its infrastructure, SD-WAN is the next step.
Intrigued by SD-WAN's potential? Contact Vonage Business to learn more about the technology's capacity to transform your organization.