The digital age has changed the way financial services operate, pushing the industry to remain tech-savvy just to keep up. However, this technology-driven change is not without problems. Old legacy systems, strict regulations, and demand for real-time data management have put pressure on conventional solutions, making them appear obsolete. But all-photonic networks, which connect endpoints directly with optical paths, could be the answer, helping the financial world stay fast, flexible and sustainable.
Chairman of the Technology Working Group at the IOWN Global Forum and leads NTT’s IOWN technologies R&D.
The challenges facing financial services today
Technology is deeply woven into financial services, but that also adds complexity. A major obstacle is performance and latency issues. High-frequency trading, cross-border payments and fraud detection require real-time data processing; However, existing electronic networks, built with copper and fiber optic cables, face delays, making it difficult to achieve the accuracy needed for time-sensitive transactions. proceedings. Another challenge is meeting regulatory demands. Compliance with regulations such as the European Digital Operational Resilience Act (DORA) is complicated and expensive. Financial services laws require strong data protection and operational stability, but current networks can sometimes fall short. Finally, pressures on sustainability are becoming more prominent. As sustainability becomes a key business objective, the energy consumption of data centers and network infrastructures has become a major concern, often clashing with companies’ green ambitions.
So what are photonic networks?
Simply put, photonics is about using light, specifically photons, to transmit data. Unlike electrical signals from copper cables or even regular fiber optics, photonic networks use light to send data directly, skipping the usual electronic conversions. The result? Faster speeds, more data capacity and much less power consumption.
All-photonic networks send data in the form of light without converting it between electrical signals. This configuration reduces delays and improves energy efficiency, making photonics perfect for industries where fast and reliable data transfer is critical, such as financial services.
How photonic networks could transform finance
Photonic networks enable more predictable network paths, ensuring consistently low latency. This is a great advantage for financial companies that need all the advantages to remain competitive in their markets.
Complying with rules like DORA is not easy; requires that institutions be highly resilient and flexible. Photonic networks can help meet these demands by enabling real-time data monitoring and faster data replication. This means better disaster recovery capabilities and more robust backup strategies.
These networks also support interconnected data centers with low-latency failover options, ensuring operations can change seamlessly during maintenance or outages. This flexibility makes it easier for financial institutions to meet recovery time objectives (RTO) and recovery point objectives (RPO) set by regulators.
Photonics and the path to sustainability
Data centers and networks consume large amounts of energy, which presents an obstacle for companies seeking to reduce their environmental impact. Photonic networks offer a solution, using light for data transmission and avoiding energy-intensive electronic conversion steps.
Adopting photonic systems helps businesses reduce energy costs by requiring less energy for data transfer and ultimately reducing operating expenses. Additionally, by enabling more reliable data transfer, photonic networks would allow financial services institutions (FSIs) to relocate their data centers to rural areas, where renewable energy sources are more accessible. This would help these organizations align more closely with their ESG objectives without having any negative impact on the speed of operations.
In an industry where meeting sustainability goals is linked to investor trust and public approval, this is no small feat.
Looking forward
While photonics technology is still finding its feet, its potential to reshape finance is clear. Adopting photonic networks can help financial companies address current problems while unlocking innovation opportunities in the future. With better support for distributed computing, real-time analytics, and stronger data protection, FSIs can become more resilient, meet strict compliance standards, and achieve sustainability goals, all while keeping costs under control.
Financial companies that decide to invest now in photonic networks will likely lead the pack in a rapidly changing market. With unparalleled speed, reliability and energy efficiency, photonics is not just a solution to today’s problems; It’s a way to future-proof operations for whatever comes next.
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