Press "Enter" to skip to content

Rethinking Connectivity to Achieve Security and Compliance

In an increasingly hybrid cloud environment, Data Mesh technology offers a secure, holistic approach to data connectivity across fintech applications

According to a recent survey, 78% of respondents believe that improving the customer experience is a top objective propelling their bank’s strategic investments and implementations of technology, while 72% say that fueling efficiency is a top objective. But the most shocking statistic mentioned is that 96% of respondents say that cybersecurity dominates board discussions.

Looking at this from a distance, we see that community banks and credit unions are increasingly looking to fintechs to improve their offerings and simplify operations while also addressing their security concerns.

Executing on these strategies often pushes financial institutions, especially the community banks and credit unions that are too small to develop in-house solutions or software, to outsource certain functions to different applications or vendors. Of course, outsourcing critical operational functions brings up other concerns, such as application architectures, connectivity models and compliance issues. When financial institutions choose to implement new technologies, they must consider the ways that their fintech vendors are delivering value while simultaneously providing their offering in a secure and compliant manner.

More Data Means More Support

Historically, most of the applications supporting a financial institution’s day-to-day banking operations lived in its data center alongside the core banking platform. However, this architecture did not make it easy on the financial institutions to quickly adopt modern fintech offerings – ultimately hindering their ability to offer new competitive services and an enhanced customer experience.

Recent technology advances have created new demands on a financial institution’s network infrastructure as applications formerly housed in their data centers are now operating in the fintech application provider’s public and private cloud environments. This means that core banking data no longer lives in the same environment as the applications that rely on it.

Many of these financial applications require highly available, persistent access to core banking data, despite the challenge of these applications being physically and logically separated from the data source.

Adding to this difficulty is the fact that many financial institutions’ IT teams are already overburdened with maintaining existing systems. Without the budget or bandwidth to tackle managing additional systems and networking solutions, financial institutions struggle to quickly and efficiently add new applications.

Institutions could benefit from the creation of a secure and standardized layer of connectivity across all applications that eliminates the complexities of connecting, managing and supporting access to their data. 

Sensitive Data Requires Increased Security and Compliance

For the financial institutions seeking to provide access to core banking data, there remains a well-founded caution in providing access to that data from a security and regulatory perspective. Between increasing security threats and stricter compliance in a highly regulated industry, financial institutions must be sure to outsource functions only to the vendors offering solutions that take both application and connectivity security into consideration.

While many fintechs are making moves to the cloud to solve for issues of flexibility and manageability, these applications still rely on financial institution data that is not migrating to the cloud. Often the responsibility of connectivity is shared between the fintech and the financial institution. Not only does this burden the institution with maintaining yet another system, but many times this presents a potential security and compliance gap as these connections are not updated at an ideal frequency.

Institutions must ensure that fintech vendors are helping to secure and maintain the connections between the core data and applications. Luckily, many fintechs have already begun to leverage advanced cloud connectivity solutions to build secure, compliant and easy-to-manage connectivity options into their application offerings.

Enter: Data Mesh Technology

The introduction of hybrid cloud environments has reshaped the industry’s approach to application architectures, connectivity models and security postures, requiring expertise and coordination across multiple departments. However, the concept of a Data Mesh has emerged as a way for financial institutions and fintechs to address these challenges holistically.

Similar to traditional VPN technology that enables sharing of data across private and public networks, a Data Mesh is designed to provide a means of connectivity for applications connecting to secure data sources. With one-touch deployments, Zero Trust network security, automated maintenance and simplified support, it is an ideal solution to connect fintech vendors to their financial institutions’ customers.

By creating a layer of connectivity combined with centralized management features, multiple disciplines (networking, security, automation) are combined to eliminate the need for highly specialized experts to build and maintain this new data fabric. When properly implemented, a Data Mesh allows an application provider to deploy new financial institution connections with the touch of a button, monitor everything from a single pane of glass and patch any connection in minutes.

This not only removes the burdens from a financial institution’s IT team, but also increases overall security and compliance by establishing an easy-to-manage connective tissue between applications and data sources that was previously handled by a variety of point solutions and plenty of manual labor.

With a single layer of secure connectivity infused with security and automation capabilities, fintech applications can securely consume distributed data as it needs without aggregating that data centrally. This reduces the stress on financial institutions worrying about where the data lives or the ongoing maintenance of another network connection.

Likewise, fintech providers employing this technology are able to lower financial institutions’ switching costs from vendor to vendor, get new institutions running in a fraction of the time, and allow CIOs a better opportunity to achieve regulatory compliance related to the network in an automated and streamlined fashion. With a Data Mesh, both fintechs and financial institutions can focus on delivering value to their customers without worrying about IT infrastructure.

It is imperative that financial institutions understand the importance of working with fintechs that take network security and compliance seriously. As more fintech applications are served from the cloud, the connectivity component of every vendor becomes an even greater concern.

Fintechs employing the use of Data Mesh connectivity are not only showing that they share this concern, but that they are also striving to deliver the most robust security and compliance available.

Mark Stavrou is CEO and Co-founder of Trustgrid, a pioneer and leader in connectivity for fintech applications. For more information, visit www.trustgrid.io.

This content is for CU BUSINESS eMagazine + WEB ACESS and THE TEAM BUILDER (GROUP SUBSCRIPTION) members only.
Log In Register

Comments are closed.