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Edward J. Wood

Programmable Networks are Poised to Change the Way the Financial Services Community Connects Forever

As arguably the most “well connected” industry vertical in the world, the financial services community has always led in innovation when it comes to networking. From the ticker tape to the “wiring” of funds, and now from ultra-low latency networks supporting black-box trading algorithms to nearly instantaneous micro-payment applications made on mobile devices, banks, exchanges, alternative trading systems, brokerages, market data companies and the entire ecosystem continues to push the limits of innovation to stay relevant and profitable.

The financial industry continues to be both the number one sector in terms of IT spending (including networking) and the number one target for cybercriminals. As Jesse James once answered when he asked why he robbed banks, he infamously said: “Because that’s where the money is.”

As with all waves of change in technology, while Wall Street firms may be more conservative and slow to move than smaller firms, they nevertheless always are looking at and testing new solutions, and as has been evidenced over the last two decades, have moved a massive amount of storage and compute to multiple private, public and hybrid clouds. While this movement began based mainly on cost reduction, as it became clear the cloud could replace expensive, complex and vulnerable premise-based systems, momentum grew and continues, which raises a new set of challenges for firms (notably on ensuring data integrity and protection of infrastructure, even if virtualized).

Financial firms were among the first to embrace SD-WAN, particularly for their branch offices and to connect trading partners internally and externally. In fact, in the late 1990s, it was the high-end trading community that drove the creation of financial extranets that use virtual private lines to connect hundreds of thousands of traders globally. Innovators like IXnet, founded by David Walsh during that time, and merged with IPC, a voice trading “turret” company, disrupted not only the economics but the “speed to market” when these secure virtual connections could be turned up in a matter of days rather than a matter of months.

Other companies like Radianz followed suit and created an entirely new category, and today, a majority of voice trading and hundreds of other related applications happens over IP networks as securing those networks has improved. These were the early versions of SD-WANs, which enable banks to blend private circuits and network infrastructures in their largest locations and data centers (which rival service provider networks given the size of banks and related firms). It’s no surprise then that decision-makers responsible for ensuring connectivity, network performance, network security, and network costs are adopting SD-WAN across more than just the traded markets, but for retail banking as well.

That’s progress – that’s evolution – but there is an exciting, growing movement to Software Defined Networking (SDN), a game-changing technology that enables a new way to design, secure, manage and flex networks.

Although this technology seems to have appeared suddenly, SDN is part of a long-held vision to make computer networks more programmable. Programmable networks separate the control and data planes, work on OpenFlow and network operating systems, and are an important part of the network virtualization revolution.

Enterprise networks are complex and difficult to manage which has driven premium, secure and highly performant (low latency) solutions from all the large carriers, service providers and now cloud providers. These networks have traditionally required an enormous amount of physical equipment, from routers and switches to middleware and firewalls, servers, load balancers, and intrusion detection systems to name a few.

Routers and switches run complex, distributed control software that must be closed and proprietary, while software associated with traditional networks require many expensive network administrators to do everything from configuring and provisioning individual network devices with interfaces that vary across vendors.

The headaches associated with the development and management of large enterprise networks have driven the growth of network management tools, for voice and data networks, offering something of a “unified view” into a morass of components. Traditional enterprise networks over time increased complexity inflated both the capital and operational costs of running a network. In addition, as companies were acquired and merged, one of the most difficult and expensive tasks became integrating multiple architectures.

All this slowed innovation, increasingly the case as digital services became the competitive advantage for banks, brokerages, insurance companies, and others.

While SD-WAN brings some benefits, it is in our view another transitional networking technology. Here’s why.

An SDN separates the control plane (which decides how to handle the traffic) from the data plane (which forwards traffic according to decisions that the control plane makes).

An SDN consolidates the control plane, so that a single software control program enables management of multiple data-plane elements, providing direct control over routers, switches, and middleware, enabled in part by Application Programming Interfaces (API).

Without going into the deep technical details associated with how all this works, suffice it to say making computer networks more programmable enables innovation in network management and lowers the barrier to deploying new services while reducing costs and decreasing cyberattack vulnerabilities with the right security solutions.

As data moves through SDN environments, it can be secure while in motion, and at rest, thwarting man-in-the-middle attacks while also improving the quality of services, which has been the “holy grail” for network experts for decades.

With SDN, networks can be secure and fast, despite previous failures in this domain, as more layers of security have slowed performance, which will not fly in an industry where the sharing of data and processing of transactions is now expected to occur in a second or less.

The vision for SDN applications in the financial markets – one we are passionate about at Dispersive – is remarkably bonded to the vision network technology innovators held decades ago when the Internet “happened.”

Enterprises were frustrated with service providers given drawn-out schedules and high costs associated with building networks and rolling out services.

Third parties, for example, exchanges connected to banks for trading, were frustrated by the complexity and expenses associated with setting up private, low latency connections.

Application providers knew they needed fine-grained control to dynamically meet the needs of those using their applications, and the ability to prioritize traffic to do so.

Dynamic, active networking required multi-vendor and vendor-specific software, and gaining a unified view and unified control over a mixed bag of physical elements and the software connecting those elements felt nearly impossible.

Innovation in applications was slowed as it was expensive and distracting to design and test using production networks, which some students of programmable networking today believe was the “piece of sand in the shoe” – that ongoing pain point – that motivated investment and thought leadership in programmable networking in the early days.

Dispersive has been a leader in developing SDN technologies, working with the most mission-critical use cases and organizations including the US government, financial institutions, the energy industry, healthcare and pharmaceutical companies to ensure our platform stood up to the highest possible demands.

Our Dispersive Virtual Network (DVN) technology has been built to support large scales of data, a massive number of endpoints (from servers to mobile devices), and high-end business applications that deliver tremendous competitive advantages and business results.

Security, including defenses against cyber-attacks, was not an afterthought for our scientists – it was in the beginning when we started development nearly ten years ago, and it is today the soul of our services.

While transitional approaches like SD-WAN offer great improvements compared to traditional, less virtualized and more complex enterprise networks in the financial services industry, our customers are seeing a light at the end of the transitional tunnel, where SDN delivers a fully software-supported, application-aware, fully controllable, fully visible and fully programmable environment.

Our advanced overlay networking enables our customers to take advantage of the Internet, the most resilient network in the world, but also the most vulnerable without the appropriate security software and policies.

Finally, while Network Function Virtualization (an abstraction of the physical network in terms of a logical network) does not require SDN, and SDN (the separation of a logically centralized control plane from the underlying data plane) does not require NFV, the symbiotic relationship is obvious especially to the large carriers and service providers who have virtualized even their core networks, and now can leverage SDN to roll out new services more rapidly and securely than ever thought possible.

This is a bold vision, and a present reality, as SDN and layers of security that can be orchestrated elegantly are poised to once again change the game in connecting the financial community.