Just two years ago, Custom Connect opened an office in the City of London. Now, it has established a good reputation as the independent specialist in data communication networks for financial organizations. Many of the world’s largest Investment Banks and Alternative Investment Companies are now relying on Custom Connect to deliver and manage their mission critical infrastructure. What are the developments in networking for Financials? Six trends that reshape the data communications arena.
David Morgan, Account Director, Custom Connect
Trend 1: More cloud, better networks
Investment Banks and other financial institutions have typically been reluctant in adopting cloud for concerns over security and compliance. Now we see that they are increasingly accepting cloud technologies and offerings in order to build integrated cloud environments.
The need for higher bandwidth connectivity continues to grow, with a trend towards more homogenous networks. An integrated cloud environment requires better, more complex network solutions outside of the data center, these need to be accessed securely and 24/7. ‘No Connectivity, No Cloud’ as we say at Custom Connect.
Trend 2: The need for speed is toning down
Apart from a minority of companies that keep pursuing the lowest latencies, the speed race is going towards becoming nearly the fastest, rather than the fastest. Many traders have balanced out the costs for further investing in new technologies against the revenues they may get by this higher speed. And for many, it now has become a zero sum. High availability and bandwidth are just as important.
Trend 3: Better connectivity results in reduced complexity
Gaining competitive edge through better networks is always a cost/benefit analysis for the individual firm and will depend on many factors such as trading strategies, geographical location, what the competition is doing… But ultimately it comes down to ROI (Return on Investment). Good connectivity will give a competitive edge wherever you implement it (market access, client connectivity, etc.). Improved client connectivity, for instance, leads to reduced complexity in carrying out business with your counterparties.
Trend 4: Effects of New Regulations Still Uncertain
Mifid2 and Dodd Frank are major regulatory initiatives that are aimed at restricting the opaque nature of markets. Neither has been fully implemented yet, so it is unclear the impact they will have regarding global connectivity, however they will no doubt fundamentally affect the way trading operates globally.
Trend 5: Further Commoditization of data communications
Further commoditization of the telco market and bandwidth infrastructure providers has led to an increase in the number of independent connectivity solution providers that are able to deliver global infrastructure projects and trading networks to the financial community, using their ability to effectively deliver Managed Solutions and IaaS (Infrastructure as a Service).
Trend 6: Emerging Markets drive global connectivity
Increased demand for global connectivity is strongly driven by the rapid improvement of the connectivity available into emerging markets. Connectivity into hubs such as Istanbul, Dubai, Shanghai and Singapore is currently the largest growth market within the sector.
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