Comms supplement: NGNs feature: Building for recovery

One of the proposals for helping Britain and other countries out of the recession is to invest in our digital infrastructure, as previous governments did in the physical one after the crash in 1929. That means delivering Next Generation Networks (NGNs), which can run voice or data traffic and provide extra bandwidth and speed. Duncan Jefferies examines the private and public initiatives and what benefits NGNs might offer financial institutions

The Next Generation Network is a catch-all term for the fast networks of the future currently being developed and deployed by the major telecoms operators. The International Telecoms Union says that ‘the fundamental difference between an NGN and today’s existing network is the switch from circuit-switched networks to packet-based systems, such as those using Internet Protocol (IP)’. Fixed NGNs are expected to be in place across Europe by 2012, with the NGN mobile infrastructure completed by 2020. They provide financial institutions with the opportunity to converge their IT and telecommunications networks, making for a faster, more cost-effective and flexible infrastructure, with lower running costs and improved functionality. Running mobile banking networks or richmedia online banking websites on such an infrastructure in the future will offer banks and insurers growth opportunities and efficiencies that just aren’t possible at the moment.

“Running separate voice and data platforms is clearly more expensive than running a single converged network,” agrees Alison Adams, senior manager VPN, ntl:Telewest Business. “It also does not allow for the introduction of new applications, such as unified communications, which can improve efficiencies and the relationship that banks have with their customers.”

Ever increasing electronic trading message rates and rising stock exchange volumes are also changing the network requirements of wholesale trading institutions. “Banks need to have enough capacity to cope with the reams of data they’re receiving, especially given that the entire trading floor is often based upon the same platform,” says Adams. “Downtime is simply not an option, as a split second of latency can be the difference between profiting from a deal or not.”

The record retention requirements of the EU’s Markets in Financial Instruments Directive (MiFID) are also driving the NGN business case, as wholesale banks must have sufficient bandwidth to ensure huge volumes of data can be transferred over the network with minimum impact on performance. The best execution requirement alone demands much more record keeping and data transfer than was previously the case.

Retail banking infrastructure
Since the introduction of the UK Faster Payments Scheme in May 2008, retail banks in the country have been required to clear internet and telephone banking credits and standing orders on the same day. Banks without substantial bandwidth risk seeing their online payments infrastructure buckle when customers access their accounts en masse.

“Firstly, they need to ensure seamless integration between their front, middle and back office to ensure that transactions don’t get stuck,” says Adams. “Secondly, the UKFPS is expected to handle a peak volume in excess of ten million transactions per day, and so it is absolutely critical that banks participating in the scheme have a resilient, low latency next-generation backbone in place to ensure that customer transactions don’t falter.”

Digital Britain
Lord Carter’s Digital Britain report, published on behalf of the British government earlier this year, set the goal of high-speed broadband availability for 98.5 per cent of the UK population. If achieved, this will increase the number of consumers that carry out transactions or banking payments online yet further, so banks need to be prepared. But the government’s apparent unwillingness to consider a minimum universal broadband speed above 2 Mb by 2012 is of concern for groups such Consumer Focus, particularly when other European countries, such as Germany and Sweden, already achieve average speeds of 4.8 Mb and 7.4 Mb respectively, and Finland has set a 100 Mb target. It is feared that a 2 Mb speed will inhibit Britain’s digital economy, as consumers will be unable to take full advantage of some digital services and products. Equally, financial institutions may not be able to offer the same retail banking services in the UK as they can elsewhere.

Tim Naramore, chief technology officer of Masergy, a wide area network service provider, says the financial sector itself has been an early adopter of converged networks. “Things are becoming more and more network-centric. If you look at cloud computing and virtualisation, and all the other buzz-word type technologies in the IT world right now, they’re all centred around the network. Cloud computing doesn’t do you any good unless you can get to the cloud.” Buying up ever-increasing amounts of inexpensive bandwidth for legacy networks will only get you so far. “Once you start converging real-time services on that network, you really can’t get away with just one pipe. If somebody can hit YouTube and interrupt the chairman’s video conference on a thousand dollar piece of telepresense gear, that’s just not acceptable,” he adds.

Benefits
Voice over Internet Protocol (VoIP), long predicted as the future of telecommunications but often lacking the sound quality and reliability required by some financial institutions, may finally see sector-wide take-up once NGNs are in place. Latency can be reduced to a matter of micro-seconds, and network analysis tools can prioritise packets of data passing over the network. “The applications banks or insurers see as critical – voice, payment services, however they call it – they will have priority and take the lion’s share of bandwidth, which is a markedly different scenario from where we are now,” says Julian Payne, head of the Cable & Wireless data products team. The Cable & Wireless NGN is branded the Multi-Service Platform (MSP). The company claims it is the only live NGN in the UK with 153 corporate customers, including LloydsTSB, now of course the Lloyds Banking Group [see boxout]. BT does though, of course, have its own much bigger £10 billion 21st Century Network (21CN) project, which is targeting everyone with NGN capabilities and looking to accommodate the unified communication applications of the future. It though is presently being scaled back in these tough times, as it’s unlikely to make a profit any time soon.

According to Jirina Yates, marketing director for EMEA at Avaya, a rival provider of business telecommunications services: “The one thing all NGNs have in common is that they have SIP protocols at their core.” Session Initiation Protocol is a standard that allows multiple types of communication, such as voice and instant messaging, over various networks and devices, allowing the means of communication to be switched without needing to initiate a new session. Asked why SIP is so important, Yates responds: “It’s about what it delivers to the end user. It enables you to escalate one mode of communication into another. For example, should you be having an instant messaging (IM) conversation and then decide to speak to each other, you don’t have to stop and dial a phone, you can just click to communicate via voice.”

Large cost savings can also be made on standard internal calls. “If you’re a bank in London, and you need to speak to a colleague in Singapore, nine out of ten times you will be using a public switched telephone network (PSTN) to make that call, which is enormously expensive. If you can drive that traffic over your internal network, you pay nothing,” says Yates. The increased bandwidth of a NGN also gives banks the ability to extend software applications right across the organisation. Yates likens it to the enterprise becoming a service provider. “The user does not have to have a certain application installed on their PC to access it. As long as they are on the network, they can access it wherever they are.”

The voice and data convergence that NGNs enable also allow financial institutions to run the kind of critical customer relationship applications that a contact centre desperately needs – such as ‘who is calling telepresence’; where they’re calling from; etc. You really can’t afford to compromise on voice, as people will hang up and not use the contact centre again if you get your service proposition wrong.

In addition, NGNs provide banks with the ability to increase the range of services offered in their high street branches. “You can put a video-conference suite in branch that allows a customer to come in and talk about financial services with someone who might be in a contact centre elsewhere,” says Cable & Wireless’ Payne. “We’re also seeing more and more digital signage going into branch networks, which is run in the data centre …this means you can change adverts in real-time, adapting your advertising during the arc of the day depending upon what sort of customer is walking through the door.”

Some financial institutions are taking a staggered approach to NGN implementation. “We have some customers that are using our infrastructure for their trading network, but they’re still using a legacy system for their own banking and branch office network,” says Masergy’s Naramore. It’s clear, however, that the future lies with Next Generation Networks and their increased flexibility, resilience and scope for innovation, which will provide opportunities for growth. And with the immediate cost-savings they offer as well, it seems even the recession won’t halt the march toward convergence.

Case study: Lloyds TSB Asset Finance NGN implementation

LloydsTSB Asset Finance is giving Cable & Wireless a three-year, multi-million pound contract to deliver a next generation contact centre solution across more than 115 sites in the UK and the Channel Islands. The complete voice, data and contact centre system will bring together various legacy telecoms systems into a single IP-based platform.

The new solution will assist the management, control and flexibility of LloydsTSB Asset Finance’s call centre operation, reducing call queues and improving customer response rates. For instance, during a time of heightened call activities, a resource planning tool will calculate how many operators are needed to handle the call volumes.

The network can support activities ranging from a single call centre operator working from home, a small office requiring sophisticated call centre services, as well as larger contact centres receiving up to 650,000 calls a month. The technology also features email channel and call blending functionality.

Commenting on the deal, Al McMullan, head of technology & IT strategy, at Lloyds TSB Asset Finance, said: “We want all of our customers to rank us as their number one financial services company and so updating our systems to ensure we can provide them with the best possible customer service is vitally important to us. We’ve enjoyed a great working relationship with Cable & Wireless for some time and its call centre proposition, coupled with its focus on delivering good service to large enterprises, made it the obvious choice for this project.”

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