Financial API and web services: the performance - security - compliance pyramid

In the financial sector, dominated by the competing demands of real-time speed, bulletproof security and regulatory compliance, technical solutions can help strike the right balance. The traditional financial sector is under pressure to evolve - to compete or cooperate with fintech upstarts - and to move forward with the often painful process of complete digital transformation. Meanwhile these institutions are looking to maintain trust and build services for the full range of their current and potential customers. Underpinning this future is an understanding of what technologies will meet the needs of mobility, advanced analytics, open banking and API performance, security and compliance. 

Performance 

Most predictions about what’s in the pipeline for financial services and fintech companies sound futuristic. Consulting firm McKinsey has highlighted several of these in their publication, FinTechnicolor: The New Picture in Finance, claiming that fintech isn’t a threat to the financial services establishment, despite being a disruption, and the two can work together to change the financial sector for the better. 

Enabling the initiatives the industry foresees will require both innovative breakthroughs and faster moves into real-time territory. For example, in order for blockchain technology to live up to its promise as the basis for secure, competitive payments, it will have to become much faster. With more real-time transaction monitoring and risk and fraud detection, near-individual-level, granular customer data analytics, and the increasingly widespread adoption of AI chatbots and other AI-powered technologies, there’s no room for latency and poor performance. The near-future is instant and automated, but is the underlying technology that ensures performance ready for this instant, automated world?

Performance underpins all manner of finance-industry use cases it needs to enable, ranging from no-latency, high-frequency trading to big data for banking applications, even a small lag in performance can mean the loss of considerable sums of money or applying inaccurate or out-of-date data in transactional or risk-related decision-making.

Security 

As financial firms and fintech companies both make use of - or entire business models based on - customer data as a product, the accompanying question of managing data security is never far behind. Data security is not only a priority from a compliance perspective but is key to building customer trust and loyalty. 

Banking and financial institutions are frequent targets for DDoS attacks and attempts to disrupt site/app operation. Data leaks/breaches are mentioned in the news almost constantly, the likes of which lead to loss of customer data and the possible loss of customers funds. Insufficient authorization and authentication procedures are also vulnerabilities. Fraud and theft are likewise problems, as are insecure communications and insecure code. 

Cybersecurity risks constantly threaten to expose the most sensitive consumer information - personally identifiable information, passwords, account numbers, credentials - while undermining a financial institution’s ability to protect its reputation, brand and trustworthiness. While all cyberthreats can’t be prevented, financial institutions will have to become more proactive and agile to identify and react to threats in closer to real time.

Compliance

There is no such thing as the financial industry without regulatory and legal compliance constraints. Some of these come in the form of performance-related mandates, like PSD2, while others have to do with geographies in which a business can legally operate. Yet others have to do with the handling of personal data (GDPR, CCPA, etc.). 

Technology has to enable automated know-your-customer and anti-money laundering processes, while ramping up to handle real-time fraud detection. AI and machine learning are becoming major parts of the real-time compliance landscape, and powering the heavy data lifting and real-time transactional analysis requires performance. 

Compliance is a complex web of intersecting concerns. Essentially, compliance, too, demands security and performance.

Post-disruption innovation

As fintech and other technology companies have infiltrated the traditional finance space, things have changed. Are we in the midst of a revolution in the financial, trading and banking sector, or is this the next stage of evolution that marries financial solutions with technology to ensure that performance, security and compliance are taken care of while innovation marches forward? 

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