In Part 1 of our Fintech discussion on From The Racks, we sat down with Geoff Ois, the director of sales and leasing for DFT Data Centers in the Greater Toronto Area (GTA). As many of our readers know, Toronto is home base for much of Canada’s financial services industry, including Canada’s “Big Five” banks.
Geoff’s location in Toronto and previous experience working with these Canadian banks have given him a front row seat to the innovation and technology adoption that we’re currently seeing in the financial services industry. Many large banking and investing organizations are working to adopt new fintech solutions capable of empowering customers and giving them better, more flexible access to their money and financial services.
In part one of our two-part discussion with Geoff, we talked about the emergence of fintech solutions and their benefits for both the banks and their customers. In part two of our series, we’re focusing on the requirements of these new technologies, and the challenges that their deployment could create on the data centers and IT infrastructure of large banking institutions.
Here is what Geoff had to say:
From the Racks (FTR): What challenges are the large financial services companies facing when it comes to embracing and adopting new fintech solutions? What impact is it having on their IT infrastructure and data centers?
Geoff Ois: For the organizations looking to innovate their own fintech applications, it means bringing on developers and other technologists that can design, develop, test and implement new technologies for their customers and their business.
Developers need test environments in which to design new applications and to properly examine and assess them. These things all require compute and storage resources. And this means more data center space.
Then, if new fintech applications meet their expectations, they’re going to want to bring them to market. This also means more data center space since those applications will need to be hosted somewhere, and will need the compute and storage to run.
From the Racks (FTR): Are these organizations prepared for this wave of innovation? Are their data centers, IT infrastructures and networks ready to embrace and fully utilize these new technologies?
Geoff Ois: It’s definitely going to be a challenge. The pace of fintech innovation is moving so fast that everything is constantly shifting. They’re preparing their IT infrastructure while the goalposts keep moving.
From the Racks (FTR): What do they have to do, and what do they need to start thinking about to get themselves ready for a fintech revolution?
Geoff Ois: There are a few considerations for these big banks as they continue to innovate and introduce new fintech solutions. First, they need to think about the scalability of their resources. They need to think about geography and physical location of their IT resources. Finally, they need to think about time to market and time to provision.
As these new fintech solutions are developed, tested and implemented, banks need new data center space for dev and test environments, and to host these solutions when they’re brought to market. For that, these banks are increasingly turning to leased data center space to meet their security requirements and remain in control of their IT infrastructure.
The one thing that they can outsource is the actual, physical data center. Having the flexibility to grow in a space and the ability to have space on demand is essential with everything moving so quickly. It’s easily audited and easily outsourced. It’s a flexible and readily available environment that they wouldn’t have if they build it themselves.
Then they have to think of the speed of processes. Many financial transactions are time sensitive and lag can be a real issue. If they’re planning on rolling out fintech solutions to multiple, disparate geographies, they’re most likely going to want data centers in those markets – close to the edge - to decrease lag and ensure that all processes and requests are handled in a timely fashion.
This is another area where colocation and leased data center space can help, since it would be simply impractical to try and build a new data center in every physical market where a new fintech solution is being rolled out.
Finally, there’s the issue of time to market and time to provision. If a new technology is available, and a bank wants to bring it to their customers in a timely fashion, they’re going to be slowed by the need to design and build a new data center to host it. That’s a process that can take years. The risk is competitors beating them to market with alternative fintech solutions.
Data center outsourcing is a solution here as well. By leasing space, companies can have their infrastructure operational in weeks or months – speeding the time to market and ensuring that advanced fintech solutions are in use as soon as possible.