When the Faster Payments Initiative comes into force in May, telephone and internet banking credits that currently take up to three days to clear will have the potential to be cleared in just 24 hours. For this to become a reality, however, banks need to ensure their networks are fit for purpose.
With transactions requiring immediate and automatic processing, banks need to move towards a stable and reliable network infrastructure able to cope with such demands on bandwidth resources and vendors and resellers alike must be in a position to advise on the best means of achieving this.
Further pressures are being placed on the financial sector through the Markets in Financial Instruments Directive (MiFID), in force since 1 November 2007. The directive will unify and cement processes for safe and reliable data management and storage.
It is clear that both the Faster Payments Initiative and MiFID will require banks to put in place high-speed broadband networks. In the case of Faster Payments, one-day clearing demands that data will need to be carried as fast as possible across the bank’s network.
It is therefore important for networks to intelligently prioritise traffic. Next-generation networks (NGNs) are the best means of achieving this. NGNs use Multi-Protocol Label Switching (MPLS) technology to allocate a priority status to each packet of data.
MiFID is an additional driver for the adoption of greater bandwidth, as investment companies labour to deliver the required record retention. Indeed, both competitive and legislative demands are leading to Gigabit Ethernet quickly becoming the default access method across the industry.
The financial sector needs to be advised now on the right technologies to underpin their responses to these important regulations. It is clear that the speeds and intelligence essential to support these regulatory requirements can most effectively be achieved through modern NGN networking.
Michael Sandison is client director, financial services at THUS
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