What Does Interconnectivity Mean To The Financial Services Industry?


Today, the reliance of point-to-point connectivity isn’t as effective as before. Because cloud technologies are increasingly important, modern businesses need to start focusing on interconnectivity. Another reason is that teams require constant access to key IT resources, which inadvertently increased the number of connected endpoints across their enterprises. While interconnectivity is now a major requirement for organizations to succeed, it is especially key for the financial services industry. In this post, we will discuss how interconnectivity exists at the front, middle, and back layers of the financial services vertical:

Interconnectivity at the FOREFRONT of the Financial Services Vertical

Teams that are at the forefront of the financial services vertical are often tasked to buy, sell, and trade assets. Some examples include wealth management consultants, government entities, high-frequency trading firms, hedge fund managers, and even banks. As these teams and individuals require unfettered access to market data, standard P2P connectivity no longer makes the cut. In addition, mere microseconds may determine a successful transaction from a failing investment. This is one of the reasons why data center colocation services with financial exchanges have increased in popularity.

Interconnectivity is needed at the front of the financial services space because of regulatory concerns (customers need to have ready access to their hard-earned funds). Firms that fail to live up to these requirements may face hefty fines. Research has also shown that this form of connectivity has become prevalent in emerging financial markets such as cryptocurrency trading.

Interconnectivity in the MIDDLE of the Financial Services Vertical

Financial services firms that operate in the middle layer are typically in charge of providing financial advices for front office organizations. This category is comprised of financial analysts and insurers. For example, these professionals may compile reports pertaining to their market studies so that the front office can make noteworthy moves according to how the markets progress. If there is a lack of interconnectivity in this space, these teams cannot effectively determine risk (for insurers) or disseminate accurate, useful insights to potential clients.

Today’s insurance firms are also increasingly looking to new technologies like IoT (Internet of Things) and AI (artificial intelligence). The former is used to collect data while the latter is used to accurately assess risk. These technological initiatives, however, can only function well in the presence of robust connectivity.

Interconnectivity at the BACK of the Financial Services Vertical

Just like any other business sector, financial services agencies also have legal and human resources departments. As these teams become more cloud-dependent, the need for reliable connectivity also increases. In order to support the IT needs of globally distributed organizations, HR teams often utilize cloud computing solutions to compile data from disparate sources, filter and organize them, and deliver the information on demand. During these situations, interconnected cloud applications often come into the picture.