In the evolving landscape of financial services, the need for cost efficiency, agility, resilience, and scalability to demonstrate competitive advantage is paramount.
As technology continues to advance, many financial institutions find themselves grappling with the challenges posed by their own aging infrastructure, geographical limitations, and the increasing demand for high-performance computing. In response to these challenges, an increasing number of financial services organisations are turning to data centre colocation providers to meet their evolving needs.
In this blog post, we explore the numerous benefits that financial services organisations stand to gain by migrating to a colocation provider such as Teraco.
Enhanced infrastructure agility and resilience
Many large financial services organisations are burdened with legacy data centres built more than a decade ago. These aging facilities come with several challenges, including outdated cooling technology, reliability issues, high maintenance costs, limited scalability, elevated PUE (Power Usage Effectiveness) and WUE (Water Usage Effectiveness), resulting in inflated operating costs. By partnering with a data centre provider such as Teraco, financial institutions have access to state-of-the-art infrastructure designed for high-performance, lower operating costs, reduced power and water usage, and enhanced reliability.
Teraco offers modern facilities built to hyperscale specifications equipped with advanced cooling systems, energy efficient infrastructure, and scalable solutions that can adapt to evolving business requirements. This enhanced agility and resilience enable financial services organisations to stay competitive in a rapidly changing market landscape.
Sustainability core to doing business
Embracing sustainability is a continuation of doing business, which means more clients are moving their workloads to data centres that take accountability for their emissions, impact on the environment, and use of scarce resources.
The cost of doing business without sustainability goals in place will become increasingly difficult as organisations embed sustainability as a key metric when delivering their products and services or contracting with suppliers and third-party service providers. Organisations realise their IT footprint has a considerable impact on their carbon emissions and consumption of resources. In doing so, they are moving their workloads to third-party data centre providers that take greater accountability for their stewardship of the environment.
Outsourcing workloads to a similarly minded data centre operator can positively reduce an organisation’s impact on the environment while achieving better cloud connectivity, lower latency, and improved security, in addition to minimising capital expenditure and overhead costs. Financial services organisations can therefore meet their sustainability goals by partnering with and being located within Teraco facilities, which have established sustainable commitments in place.
Data gravity management
The location of critical systems within ecosystem rich data centres plays a crucial role in optimising performance, mitigating risks, and managing data gravity. Many financial institutions face data challenges where large volumes of information need to be moved between public and private clouds for processing and storage.
Colocation data centres, managed by independent providers like Teraco, are purpose-built to accommodate the IT infrastructure of various private or public organisations within a single facility. Through colocation data centres, IT entities can rent space, power, and cooling and access data centre management and support services.
Furthermore, enterprises may opt for interconnection services to link with business partners and digital infrastructure services (such as CPU, storage, and networks), thereby reducing the capital expenditure of owning and managing their data centres.
Colocating servers and networking operations within Teraco’s data centre environments provide our clients with the widest connectivity choice, the highest guaranteed uptime, stringent security, and optimal operating conditions.
At Teraco, all cabinet locations are engineered with direct access to a cable distribution system that supports interconnection at any speed. Built to the highest specifications according to global best practices, data centre colocation services at Teraco are ideal for businesses looking to safeguard their data and establish solid business continuity plans.
Meeting AI’s rigorous demands for processing vast amounts of data with extreme hardware and energy requirements requires specialised data centre design considerations, IT infrastructure, network, security, and uptime. This trend coincides with colocation providers prioritising implementing more sustainable power and cooling.
Increasingly, traditional IT organisations and newer cloud-native companies consider colocation data centres with digital services as their new on-premises facilities to operate and scale their IT operations efficiently. This allows companies to focus on meeting changing client requirements and growing their businesses rather than running and managing their data centres.
By partnering with a data centre provider such as Teraco, organisations can strategically locate their critical systems directly adjacent to cloud provider on-ramps, core telco nodes, and SaaS providers.
Cost efficiency and scalability
The cost of maintaining and upgrading legacy data centres can be exorbitant. Additionally, the capital expenditure required for building new data centres from scratch can be excessively expensive, prohibitive, and time-consuming.
Teraco offers cost-effective solutions that eliminate the need for upfront capital investment and provides scalable infrastructure on a pay-per-use model. This flexibility allows financial institutions to scale their operations according to demand, without incurring unnecessary expenses on underutilised resources.
Historically, offshore banks and smaller financial services organisations established small data centres and server rooms within their office buildings in Johannesburg and Cape Town. These data centres initially evolved from small technology rooms as the banks’ IT needs expanded over time. However, regulatory bodies and internal risk departments have increasingly viewed these in-office data centres as risky, prompting a shift away from this setup.
By offering economies of scale, Teraco enables financial services organisations to benefit from lower operating costs and enhanced operational efficiency.
Facilitating digital initiatives
In today’s digital age, financial services organisations are increasingly embracing digital initiatives to drive innovation, improve customer experiences, and gain a competitive edge. A data centre provider such as Teraco cultivates the ecosystem for Artificial Intelligence (AI) and Machine Learning (ML) providers to thrive by providing cloud-native services, advanced AI and ML capabilities, and high-performance computing resources.
Whether it is migrating legacy mainframe applications to the cloud, deploying AI-powered analytics platforms, or leveraging SD-WAN for network optimisation, a data centre provider offers world-class infrastructure and expertise needed to support these transformative endeavours.
Reuters recently reported that 90% of all credit card transactions and 95% of all ATM transactions are handled by mainframes. In IBM’s 2022 annual report, revenue from the company’s infrastructure segment (primarily mainframe systems, software, and support) grew by 14%. These systems are not going away anytime soon but most banks have initiatives in place to modernise their mainframe applications, enabling them to use cloud-based services to support their primary transactions and record-keeping.
Data protection and compliance
Compliance with regulatory requirements and data security standards is of utmost importance in the financial services industry. Data centre providers such as Teraco adhere to stringent security protocols, compliance certifications, and industry best practices to ensure the confidentiality, integrity, and availability of sensitive financial data.
With robust physical security measures, advanced cybersecurity technologies, and continuous monitoring and auditing processes, data centre providers offer a secure environment for hosting mission-critical applications and sensitive financial information. By leveraging this expertise, financial services organisations can enhance their cybersecurity posture, mitigate risks, and demonstrate compliance with regulatory mandates.
The data centre industry has embraced laws such as the South African Protection of Personal Information (POPI) Act and the European Union’s General Data Protection Regulation (GDPR). These regulations address data protection, privacy, and the transfer of personal data. POPI, GDPR, and a focus on security have led to enterprises using data centre providers that offer robust physical security and compliance certifications.
At Teraco, this level of compliance includes Information Security Management Systems (ISO/IEC 27001), Quality Management Systems (ISO 9001), Environmental Management Systems (ISO 14001), Energy Management Systems (ISO 50001), as well as Information Security Management including Payment Card Industry Data Security Standards (PCI DSS), and ISAE 3402 Type 2.
Conclusion
The decision to migrate to a data centre provider offers numerous benefits, ranging from enhanced infrastructure agility and resilience to cost efficiency, scalability, and compliance. Collaborating with a reliable and experienced partner in Teraco means financial institutions have access to cutting-edge technology, optimised performance, and can accelerate their digital initiatives.
In an era of unprecedented technological advancement and market disruption, migrating to a world-class data centre facility is not just a strategic imperative but a catalyst for growth and innovation in the financial services industry.
