As FinTech and RegTech Continues to Flourish, Next Level Global Financial Extranets Will Secure the Future

20

APRIL 2021

By: Chris Swan

The exponential growth of FinTech is forcing banks, exchanges, and regulators, financial regulators around the world to reconsider how best to balance the benefits of innovation with the need for financial stability.

There is more data being generated, shared, stored, and accessed than ever, even as more sophisticated and persistent cyber threats continue to grow.

Technology is transforming finance around the world at an unprecedented rate, offering new opportunities but also raising new risks. The global financial markets were thriving during the first decade of this century, as the Internet grew, and software development expanded to include automated systems, algorithmic breakthroughs including “black box” trading, and ultra-low latency networking became part of the DNA of competitiveness.  

Prior to the global financial crisis of 2008, layers of innovation were generally viewed very positively, but following the near-collapse of monetary systems in many of the largest countries in the world, including the US and UK, the financial regulatory pendulum swung to the other extreme.

As a response to this, hundreds of start-ups and global enterprise developers began to invest deeply in the development of advanced financial technology (FinTech), which continues to promise innovation and economic growth through disruption of traditional approaches, and in a second wave, inspired an entirely new industry designed to improve how government agencies oversee the markets to ensure fairness and efficiency (RegTech).

On the one hand, financial and technological innovation can improve market efficiency by reducing transaction, and financial intermediation costs can make markets more inclusive, can dramatically lower agency and compliance costs, and drive more transparency which leads to more stability.

On the other hand, innovations also bring new risks, including those created when connected systems – from devices to applications to networking at the edge, to computing at the edge and in the cloud – are not fully protected.

When layers of traditional security are imposed on these systems to protect businesses, shareholders, and society, they can weigh the process down so much that the transaction speeds are not supported and, especially in the traded markets, this can lead to chaos or even collapse.

In addition to the challenges of regulating FinTech, technology is playing an increasing role in regulation. RegTech not only offers the potential for massive cost savings in meeting the compliance obligations of financial institutions but also offers the opportunity for regulators to perform their functions more effectively. The combination of FinTech and RegTech offers the potential to frame the development of a very different financial system from that which exists today, further putting positive pressure on connected systems and forcing change in networking technology, which is where the Secure Access Service Edge (SASE) comes into play.

A concept introduced by Gartner in 2019, this new paradigm for creating private networks – or extranets – supports more computing at the edge while securing the expanding perimeter and enabling low-latency and ultra-low-latency processing.

Dispersive pioneered the SASE model before it was named by Gartner, working with the most demanding government agencies, energy companies, and financial services institutions, with a vision for providing advanced connectivity that never sacrifices performance (speed) for protection (security).

Global financial extranets are not new. They evolved rapidly in the 1990s as the Internet and high-speed broadband fiber-optic network and switching technologies attracted billions of dollars of investment. By replacing expensive, complex, difficult to manage circuits, banks, exchanges, market data providers, clearing and settlement platforms, and others recognized massive cost savings.

With the growth of the largest extranets, like the one pioneered by IXnet and IPC in the late 1990s, not only did private IP networks, including MPLS networks, reduce costs but supported innovation given their speed and reliability, driving automation, globalization, and early AI applications, vastly altering the world’s capital markets infrastructure. 

A huge and irreversible revolution occurred within the trading community, one in which firms of all sizes could participate in a broader variety of execution venues all around the globe, going from traditional physical exchanges to 24-hour-a-day interconnected trading venues.

Lowering barriers to entry minimized the influence of the large institutions who for hundreds of years controlled the markets, with connectivity and technology allowing new competitors to provide some of the services that have mainly been provided by a limited number of firms in a closed market environment.  

With all this innovation and opportunity, challenges, especially in the cybersecurity arena, grew, with attacks that have become more sophisticated and well-funded over time, given the billions and even trillions of dollars exchanged.

The telecommunications industry responded and are still responding, and today – with more employees working from home, more employees getting work done on their mobile devices, and more data being generated and analyzed than we could have imagined in the early days of financial extranets – it is time to take on the challenge of full-stack, end-to-end security which is where Dispersive and the SASE approach make so much sense.

SASE is the convergence of WAN (wide area networking) and Network Security Services into a single, cloud-delivered service model. 

Instead of managing network and security separately, SASE simplifies and unifies these efforts while solving the scaling, security, flexibility, performance, and cost containment challenges networks and enterprises will face while attempting to manage the explosion of data, computing, people, groups (branch offices), applications, services, IoT systems, and edge computing entities accessing their digital assets from any device on any network, public and private.

Why are our clients opting into our evolved way to manage sessions starting at the very edge of the network?

Traditional point-to-point networking and security architectures are cumbersome, complex, and costly to own and operate.

Standard networking and security solutions struggle to fully support today’s cloud-centric and mobile-first digital enterprises. These networks are static and inflexible, with security often siloed across multiple domains. Traditional solutions do not scale and slow down the business instead of enabling innovation and agility.

Unified networking and security under a cloud-native framework enables simplicity, agility, and lower costs.

A SASE platform delivered over a distributed cloud framework provides security features for all endpoints, users, and edges. Dispersive’s SASE solution enables enterprises to manage network and security policies through a single console, making it easier and more efficient for IT teams and managed service providers to orchestrate, manage, and troubleshoot.

With SASE, financial institutions, market data suppliers, XaaS application service providers, and regulators can effortlessly connect and manage physical locations, cloud resources, digital assets, and mobile via a SASE framework.  Network and IT teams enjoy the agility of a unified network and security service managed through a single, self-service console.

The Next Financial Extranet: Less Cost, Less Risk, Greater Protection, Greater Control

  • Zero Trust: Complete session protection while removing trust assumptions in cloud deployments even when the user or device is connecting from off the network.
  • Increased Performance: SASE cloud architectures make any app, resource, or other digital services is available to users easily, globally.
  • Reduced Complexity: A cloud-based network security stack service model reducing the number of security products an IT team must manage, update and maintain.
  • Greater Flexibility: holistic delivery of security services such as DNS security, next-gen firewall policies, and credential theft, data loss, and threat prevention.
  • Greater Scalability: SASE enables enterprises to easily deploy, integrate, and manage new endpoints, apps, and services in an efficient and secure framework.
  • Data Protection: SASE data protection policies prevent unauthorized access and misuse of proprietary data.
  • Reduced Cost: SASE converts the need to buy and manage multiple point products into a single platform, dramatically reducing costs and IT resources.

All these benefits enable faster Innovation: SASE frameworks streamline new product development cycles, making companies more responsive and reactive to market needs, business opportunities, and the competition.

Dispersive’s SASE solution improves security and performance while lowering the total cost of ownership, which is why our approach is becoming increasingly popular among financial IT and security teams.

As we prepare to come back from the latest economic downturn, after over a year addressing the global healthcare crisis, the time is right to take a fresh look at how we connect mission-critical systems in real-time, all the time.

Learn more about Dispersive’s better way to keep the financial community connected here.

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