If there’s one thing that the financial firms have learned the past few years, it’s the value of being nimble. Competition in the financial services sector has never been fiercer and demands on most companies’ networks have never been greater. As a result, trading firms need to be able to quickly adjust their strategies. The catalyst for a strategic shift may come from a range of factors, such as a new regulatory environment, sudden business opportunities or changing market conditions.
Firms have generally kept an eye on their connectivity between major centres and then added more network capacity as needed. But there are major drawbacks to such an approach. One is that it means strategic initiatives run the risk of being held hostage to the network since capacity expansions may take time. Another issue is that many companies have realised that to be competitive requires global connectivity, not just having big enough pipes to handle traffic between major centres.
But how can companies future-proof their connectivity, particularly given the speed at which technology itself is evolving? How can firms ensure they will have the required network capacity, productivity, flexibility and security to respond when opportunity knocks or conditions warrant?
One solution can be found in optical transport network (OTN) technology. Let’s consider OTN by taking the four issues of capacity, productivity, flexibility and security one by one, starting with flexibility since that has important implications for the other issues.
OTN is a protocol that can allow multiple networks to run over a single piece of infrastructure. What the technology does is essentially wrap a client payload into a container that can then be transported over a network. The flexibility it allows in that respect gives the infrastructure a degree of future-proofing because it means new services can also run on the existing infrastructure.
That flexibility is what makes an OTN-based network solution scalable, which in turn translates into more network capacity as needed. A firm’s ability to tailor their network capacity to their operational needs makes them more productive. And from a network management perspective, OTN allows a company to identify network issues and faults end-to-end, meaning the network can be run more efficiently, which in turns helps with productivity.
Finally, given financial firms deal with highly sensitive information, security is a mission-critical feature. OTN allows for encryption at layer one, giving trading firms the security they need.
The 100G new normal
It was not that long ago that only the biggest firms wanted capacity of 100 gigabits or more. Today, some lower-tier firms also want that kind of capacity. While there is little publicly available data on financial services network traffic trends, one indicator can be seen in the adoption of OTN technology. A report by Inkwood Research forecasts that the OTN global market size will surge to $38.6 billion by 2025, from just $13.9 billion last year.
As financial firms look to seize new opportunities, while keeping latency and costs to a minimum, they know their network infrastructure will play an outsized role in their success. The kinds of benefits that OTN offers have led many to expect it will dominate in the networking infrastructure space, with the predicted growth in the OTN market offering testament to its appeal.