By Fernando García

MD IDP Data Centers

Digital transformation has forced banking institutions to adopt new models of relationship with their customers. It's not just about bringing traditional banking into a digital world, it's about creating a substantial change in the way banks, other financial institutions and insurance companies interact with and satisfy their customers.

We refer to the phenomenon that allows the improvement of the performance and reach of banks, through the adoption of the so-called Third Platform, whose main components are:

  • Social networks in business (social business).
  • Mobile devices.
  • Big data analysis (big data) and
  • Managed services (cloud services).

Applied to banking, this translates into new channels of communication with customers, ubiquity of access to accounts, mobile services, knowledge and understanding of customers: what, where and how they consume; All this in order to offer more personalized services. The new generations do not consider visiting the office of a bank, they want to manage their money and investments at any time from any device. All this generates a greater dependence on technological infrastructure.

Banks have gone from investing in data centers for better management of Operational Risks -according to the recommendations of Basel III and the Banking Supervisors-, to investing in large infrastructures to pivot the digital transformation and enable the "third platform". Thus, security and the management of these Operational Risks take on a new dimension by incorporating managed and distributed services, social networks and mobile devices.

For years, the typical architecture of a bank's infrastructure was based on a primary and alternate data center running online (both synchronized), and a third disaster recovery site (or offline DRS). Today we speak of "federation of several data centers", "distributed databases" and "orchestration of services" based on Infrastructures as a Service (IaaS) that allows the provision of capacity and resources in an agile, immediate and unlimited way.

Large banks have been consolidating and modernizing their technological infrastructure around large data centers for years. Banks such as BBVA-Bancomer, Banco Santander or Banco Itau have opened large data centers in recent years as part of their digital transformation strategy. These banks lead this paradigm shift in Latin America and are role models for the rest of the financial institutions.

However, smaller banks face significant challenges related to their size and scalability, geographic coverage, data hegemony, and the need to serve both traditional customers and new generations. An adequate digital strategy can make a small bank acquire competitive advantages in the market it operates. However, there are many institutions that have fallen into the so-called "digital backwardness" losing market shares, especially among the youngest.

Perhaps, the most complex decision to make is either to continue investing in data centers and own infrastructure, or to outsource hosting and/or colocation. The solution to this dilemma requires a deep analysis of the present and future needs of the bank, the offer of hosting and colocation available in that market, the regulations on data security, as well as issues that have to do with service levels, opportunity costs, time-to-market,and, obviously, economic aspects.

In short, banks are beginning to see data centers as pillars of transformation for new digital strategies that seek to move from product- and service-centric models to customer-centric models.

Ingenium is a leader in the transformation of banking data centers in Latin America. There are many financial institutions - Banco República de Uruguay, Banco de Costa Rica, Banco Central de Honduras, Banco de Crédito Perú, Bancolombia, Banco BBVA de Colombia, Banco Popular Dominicano, Interbank Perú, Banco Agromercantil de Guatemala, Banco Promerica, Banco Internacional de Ecuador, to name a few - that have entrusted their strategy of modernization and readaptation of their data centers to support the new processes of digital banking.