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Total Telecom: BFSI players leverage technology to achieve seamless connectivity

April 30, 2013

The country’s banking, financial services and insurance (BFSI) sector has witnessed significant growth over the past few years. As per a joint report by the Indian Banks’ Association, the Federation of Indian Chambers of Commerce and Industry and the Boston Consulting Group, the domestic banking industry is set to witness significant growth in the near future, with its asset base expected to be worth $28,500 billion by 2025. Moreover, as per an Economist Intelligence of India report, the share of deposits in the GDP would grow from 62.5 per cent in 2004 to 82.7 per cent in 2013. Besides, the Indian life insurance industry has witnessed significant progress. As per a report by research firm BRIC data, this market would grow from $66.5 billion in 2011 to $111.9 billion in 2015, witnessing a compound annual growth rate of 14.1 per cent. By 2015, India is expected to become the third largest insurance market in the world.

Leading players in the BFSI sector include the State Bank of India, Punjab National Bank (PNB), Canara Bank, IDBI, ICICI, HDFC, Standard Chartered, the Life Insurance Corporation of India, Tata AIG Insurance Solutions, ING Vysya Life Insurance and Birla SunLife Financial Services.

However, the BFSI sector also faces multiple challenges. Players in this market operate in a very competitive environment and are under pressure to retain customers, and offer new and innovative services. Offering up-to-date and accurate information to regulatory authorities, external channel partners, agents and advisers is another major issue for BFSI companies. In this scenario, they are increasingly banking on telecom to streamline operations, improve processes and adopt new business models. Concepts like phone banking and internet banking, coupled with the emergence of e-commerce, have been the key drivers for the adoption of innovative technologies by these companies.

BFSI players are availing of the services of operators and managed service providers to mitigate risks, enhance product features, achieve cost optimisation, prevent revenue leakage and address transformational challenges, while driving efficiency and improving service delivery. Telecom operators offer the BFSI sector customised solutions for functions like trade processing, clearing and settlement, asset servicing, fund accounting, valuation, reconciliation and data management.

Managed service companies provide IT and telecom solutions for a portfolio comprising equities, fixed income, derivatives, foreign exchange and loans.

At present, telecom networks of most BFSI companies comprise communication mediums like leased lines, IP-based technologies and MPLS-VPNs. Leased lines help companies accommodate the growing data traffic and provide connectivity between two end points. Apart from this, remote access service solutions such as Tulip Telecom’s secure sockets layer (SSL)-VPN platform can help companies in delivering secure customer applications across their networks. SSL-VPN allows banks to offer customised solutions for consumers. Such solutions help organisations extend network resources to virtually any remote user with a web browser and internet access. Further, using SSL-VPN, companies can offer limited access to their network to stakeholders like contractors and business partners. SBI Life Insurance and PNB are utilising SSL VPN to deliver secured services to customers.

On the other hand, managed service providers like HCL offer banks and financial institutions proprietary workflow solutions like HCL TOSCANA and business process management platforms such as HCL COBS (customer-on-boarding) for retail wealth management.

According to a study by Zinnov, the IT spend of the Indian BFSI sector is expected to reach $3.5 billion by 2014. Hence, BFSI companies are increasingly opting for cutting-edge technology solutions to improve operations.

tele.net undertook a survey among various companies in the BFSI sector to assess their telecom requirements and solutions.

The following questions were asked in the survey:

•             What are the organisation’s key technology requirements?

•             What mix of service providers and vendors is used?

•             What are the major concerns with respect to telecom infrastructure?

•             Which are some of the mobility and enterprise applications that the organisation has deployed?

•             Which network security tools has the organisation implemented?

•             Which redundancy tools are being used?

•             Which new product or service holds the most relevance for the organisation?

Key technology requirements

According to the survey, telecom is being used as a strategic tool by companies in the BFSI space to increase operational efficiencies, reduce time-to-market and to maintain a competitive edge.

The most widely used technologies in this segment are MPLS, leased lines, optic fibre-based networks, Wi-Max, telecom cables (mostly Cat 6 and Cat 6 E cables), MPLS VPNs, Wi-Fi, IPLCs and ISDN connectivity.

Most companies use leased lines in conjunction with MPLS connectivity as the backbone for their network. For instance, Federal Bank Limited’s (FBL) branch offices are connected to network concentration points through a 64 kbps leased line network sourced from Bharat Sanchar Nigam Limited (BSNL). These network concentration points are connected to the company’s data centre and its disaster recovery site by a 1 Mbps leased line provided by BSNL and a 16 Mbps MPLS core link sourced from Tata Communi-cations. The company uses an ISDN link as backup.

Similarly, the key locations of IndiaFirst Life Insurance Company Limited and its business partners are connected to the former’s data centres with leased lines and/ or through an MPLS network. Meanwhile, the Infrastructure Development Finance Company (IDFC) has opted for an MPLS cloud and the internet for connecting its offices (including core and access locations). The MPLS set-up at the core location provides a bandwidth of 15 Mbps and has a redundant link as well. The company’s high-availability internet connection provides speeds of 15 Mbps at its offices in the Bandra-Kurla Complex in Mumbai and Chennai, and 10 Mbps in Delhi.

IFFCO-Tokio General Insurance (ITGI) has opted for a combination of an MPLS-VPN network and broadband links to connect its offices. While the majority of ITGI’s offices (over 110) are connected via an MPLS VPN network, 40 important offices have an alternative line on this network sourced from various operators. If the main line fails, the alternative one can manage the network’s entire load. These lines work in parallel and share the load, which ensures uninterrupted connection across the company’s offices. The insurance major has 200-250 small offices that are connected through a broadband-based network. This network provides them access to the customer relationship management (CRM) application.

Apart from standard telecom tools, BFSI companies have begun deploying several IT technologies and applications. AEGON Religare, for instance, uses the application workflow data management system and business intelligence. As per the company’s respondent, the system has accrued several benefits. “The platform supports more features and functions than messaging-based tools. It allows greater customisation, and operates in a wider range of network and computing environments,” says the respondent.

To strengthen its network security system, FBL has tied up with Infosys to deploy the Finacle-enabled two-factor authentication solution, which is a network security framework built on the CA AuthMinder Versatile platform. The framework provides a two-factor authentication system between the bank and the end-user, thereby enabling an easy and transparent user log-in experience. The solution supports both retail and corporate internet banking channels across multiple form factors like hardware token, software credentials (CA ArcotID) and a one-time password. It also supports public key infrastructure and dynamic passcodes, which protect customers from security threats.

Most companies have opted for a data centre as well. For instance, ITGI has a hosted data centre in Hyderabad, which provides backup for its products and operational units. For redundancy at the data centre, ITGI uses the services of multiple companies. Its servers are always on for critical operations and use server virtualisation as redundancy.

Service providers and vendors

BFSI companies have largely opted for the services of BSNL, Tata Communications, Tulip Telecom, Reliance Communications, Infosys, Oracle, Aircel, Tata Teleservices Limited, Extreme Networks, Avaya, Polycom, Fortigate, Juniper Networks, RSA and Microsoft.


Key issues and concerns

Network downtime, identifying the appropriate technology, ensuring remote office connectivity, establishing a disaster recovery system for telecom networks and working with multiple vendors are the key challenges faced by companies in this sector.

For instance, network downtime is a major issue for the National Stock Exchange (NSE) and AEGON Religare. “While the communications network meets our day-to-day requirements, downtime is a major concern,” says the respondent from AEGON Religare.

IndiaFirst Life Insurance Company Limited has faced issues in selecting the appropriate connectivity medium. According to the respondent, “While multiple technology mediums are available in the market today, the one-size-fits-all app-roach is not viable. Therefore, we have to weigh our options several times before settling on a particular solution.” For IDFC, consolidation of all servers and applications at a centralised location and building a disaster recovery set-up for critical applications are major issues.

According to FBL, working with multiple vendors who fail to meet their commitments is a major concern. “In addition, identifying appropriate service providers and enabling connectivity for non-accessible remote locations are key issues,” says the respondent for FBL.

Mobile and enterprise applications

Several enterprise applications are being used by these companies – audio-, web- and videoconferencing, email, web hosting, instant messaging, toll-free services, VoIP, etc.

Among mobile applications, these companies use mobile email, mobile data connectivity, corporate intranet, conferencing solutions, push alerts, and mobile access to supply chain management and CRM.

For instance, IDFC has built a strong portfolio of mobility applications, using various platforms provided by Avaya, Polycom and Microsoft. The mobile software platforms include the Microsoft Exchange and Microsoft’s Office Communicator. The company has also rolled out VoIP across locations for internal communication.

Network redundancy

The surveyed companies use a host of platforms and technologies for network backup. For example, traffic on FBL’s network is classified in three categories – critical, normal and less critical. Based on this categorisation, the quality of service parameter is applied so that critical applications like core banking solutions are available even during network congestion.

Network security

Securing the communications network is a top priority for the respondents and they use a multi-tiered set-up for the same. For example, all of FBL’s consumer-centric applications are hosted on a three-tier  architecture with firewalls separating each segment. This ensures improved network control and security. An in-plane switching technology-based medium has also been placed between these different segments.

IDFC has opted for a multilayered security set-up, which includes Fortigate, Juniper Network’s Support Secure Access platform, and the RSA internet encryption and authentication system.

ITGI uses various suites that facilitate intrusion prevention and content filtering. Moreover, to ensure that information is secure, the company has obtained the ISO 270001 certification for its data centre.

The way forward

Most companies in this segment have prepared plans for the further development of their telecom networks. For instance, IndiaFirst is looking to integrate its business processes and systems with its promoters to take the referral bancassurance model to the next level. The move is aimed at improving the efficiency of the company’s business processes.

Meanwhile, the NSE plans to increase its points of presence across the country to provide its members easy access to services. It also plans to increase the bandwidth of its leased lines, which will not only facilitate seamless connectivity and provide overall flexibility, but will also support new services like algorithm trading on a single platform.


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