Bring financial services to the edge

Pascal Holt, Director of Marketing, Iceotope, looks at how edge computing and other growing technology innovations like AI are changing the landscape for financial services companies.

Edge computing, cloud and AI are changing the competitive landscape for financial services companies. In a highly developed and digitally mature market, speed and efficiency are essential to gain an advantage in customer retention and maximizing profits.

For traditional retail banks, edge computing creates opportunities to improve customer service, reduce costs and ensure regulatory compliance. It also allows banks to personalize their services by processing data quickly and effectively. These real-time analytics result in tailored value-added services that offer customers exactly what they need.

High-frequency trading firms use edge computing to maximize profits on high-volume, low-margin trades. Edge computing brings computation and data storage closer to where the data is generated. Reducing latency issues can help a company gain a competitive advantage when running high-speed jobs.

define edge

The edge is the physical place where things and people connect to the connected digital world, and it is transforming the way we process data. We are moving towards a more interactive world. Data is no longer just fed to us on our devices, it is collected or “pulled” out of our interactions with Internet-of-Things (IoT) sensors that we encounter in our daily lives.

As a result, the data center is rapidly changing and is no longer the center of the data. The need to efficiently handle, manipulate, communicate, store and retrieve data brings processing power closer to the user than ever before. This phenomenon is known as “data gravity” and moves the physical location of the digital infrastructure closer to the source of the data itself. This creates a new set of challenges – and opportunities – for financial services firms.

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Changing the competitive landscape

Financial companies are not only using cloud-based technology to offer their customers a much better service, but they are also doing it to stay relevant. Artificial intelligence (AI) is one such example. For processing simple, repetitive tasks or extracting insights from large amounts of data, AI applications combined with edge computing can create significant competitive advantages.

Management consulting firm McKinsey & Company estimates that AI technologies could potentially deliver up to $1 trillion in additional value for global banks each year. They found that AI “could help increase sales through greater personalization of services for customers (and employees); lower costs through efficiencies through increased automation, reduced error rates and better resource utilization; and discover new and previously unrealized possibilities based on an enhanced ability to process and extract insights from vast data sets.

A more personal customer experience

Technologies like AI, Machine Learning (ML) and Natural Language Processing (NLP) use the cloud but require edge computing to process data closer to the point of data generation. For traditional retail banks, this presents an opportunity to improve customer service while reducing costs.

Coming back to our push vs. pull discussion, retail banking has historically been heavily in the push category. All customers receive the same product information, regardless of whether it is relevant to them or not. With edge computing, the data collected helps the bank better understand individual financial needs so that it can tailor advertising and product offerings accordingly.

HSBC takes things a step further with Pepper, a semi-humanoid robot operating in multiple offices across the US. Pepper uses NLP to interact with customers. The data intelligence Pepper needs to successfully and beneficially engage with human customers also requires real-time, low-latency analytics of big data. All of this can be easily operated via edge computing.

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While Pepper is a fun way to connect with customers, there are many other use cases for edge computing in the banking and financial services space. Security and fraud detection/prevention are key as losses from unauthorized financial fraud across payment cards, remote banking and checks totaled £360.8m in the first half of 2022, according to UK Finance. There is also a significant regulatory burden on modern banking, and edge computing enables real-time monitoring of regulatory compliance.

future challenges

Many banks have net zero targets that they are trying to achieve by 2030. The Big Six of US banks have announced a variation of carbon-neutral and net-zero plans over the past two years. In addition, the United Nations-backed Net Zero Banking Alliance is bringing together more than 100 banks from 40 countries to align their lending and investment portfolios to net-zero emissions by 2050.

From a data center perspective—be it in the cloud, on-premises, co-located, or at the edge—technology solutions are available today to help achieve these goals. Advanced liquid cooling solutions can achieve a PUE of 1.03 or less. Precision immersion liquid cooling, for example, traps over 95% of server heat inside the chassis, significantly reducing energy costs and emissions associated with server cooling. Water consumption is negligible as little to no mechanical cooling is required.

Beyond sustainability, there are some unique considerations for edge computing. IT workloads typically need to operate reliably in locations not purpose-built for IT equipment. Whether indoors around people or in harsh outdoor environments, the devices must be purpose-built for edge computing. With precision immersion liquid cooling, the sealed chassis form factor offers the same type of protected, environmentally controlled conditions found in a data center facility. It is also designed to withstand all types of IT environments with minimal impact on its local environment.

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Edge computing is just beginning to impact the financial services industry. As technology continues to improve customer service and increase competitive advantage, it becomes more important than ever for businesses to have the right solutions to take advantage of these opportunities. Many of these applications push the boundaries of existing technologies and open the door to new alternatives. Now is the time for companies to take a bold step and embrace these emerging technologies.

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