As global financial transformation accelerates with agile digital services setting the new standard, low latency, security and reliability are becoming top priorities. In this highly digitized financial landscape – dominated by traditional financial organizations and new fintech startups – edge computing gives businesses the speed and flexibility they need to gain competitive advantage. With edge computing, companies can take advantage of new innovations such as AI, 5G, IoT, biometrics and blockchain.
Edge computing can create more advanced and hyper-personalized customer experiences, improve cybersecurity postures, reduce costs, comply with regulations and laws, and drive blockchain operations. In this report, we look at the benefits and risks of edge computing to understand its potential and how best to deploy and manage the edge.
Big data and customer experience
From CCTV to ATMs and from branch data to personal transactions, financial institutions process vast amounts of data on a daily basis. Add in the data transfer that is taking place as financial services go digital, and the result is overwhelming.
Edge computing, combined with the right tools such as machine learning models, artificial intelligence, data management and governance, can deliver highly personalized and personalized experiences. Deltec Bank explains that financial institutions are always looking to better know and understand the behavior of their customers.
To use all the latest innovations – blockchain, AI, APIs and IoT devices, financial organizations need to be able to instantly process large amounts of data with quality and security. Edge computing makes this possible. Instead of sending data back and forth to central databases and long journeys, edge computing processes data at or near the device location. Edge computing enables users around the world to access contactless, secure and highly personalized digital services on their devices.
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But the costs and risks must be taken into account. Implementing edge computing requires planning, investment, and a comprehensive understanding of the technology. Having thousands of active IoT devices is also a significant security risk. On the other hand, smart customer experiences often rely on AI, which in some cases has been known to generate biased results or discriminate against users due to poor data management. In addition, Gartner explains that cloud providers are essential in edge solutions. Single-vendor relationships can also present issues related to cost, solution overlap, and dependency.
Costs, automation and performance
Accenture assures that edge computing is one of the most promising technologies for the banking sector. The organization calls the technology “critical infrastructure” for good reason. Financial firms are combining edge computing with cloud and 5G and reinventing their operations. With edge computing, they are deploying virtual cashiers, facial recognition technologies, and authentication processes that are faster, cheaper, and more secure.
Edge computing has also broken down the cost barrier for digital inclusions. Billions of adults around the world still do not have a bank account. Edge computing can create more accessible and inclusive technologies. Accenture explains that it can be used, for example, to build new inclusion solutions such as offering a video chat with a banker.
Technology can also speed up the process of opening accounts and entering the financial system. The process can be fully automated without requiring human intervention at any time. This keeps costs to a minimum. Other financial services and processes can be streamlined with edge computing, including financial transactions, customer complaints, transactions and sales, and expansion of operations.
Compliance and regulation
Data management is what edge computing is for. But experts warn that financial data is the most regulated data in the world. The European Union’s General Data Protection Regulation and several US federal and state laws govern how companies acquire, manage, store, transfer, share and dispose of financial and personal data.
Microsoft explains that when handling data, organizations must follow the data privacy regulations of the country or region where that data is collected or stored. Companies using edge computing, data centers and the cloud also need to understand when data crosses national or state borders to comply with corresponding regulations.
Aside from cybersecurity vulnerabilities, the most significant risk for financial organizations operating at the edge is data governance. An organization that has violated financial data laws can face legal penalties, millions in fines, loss of customers, reputational damage, and even bankruptcy.
Modern blockchain and crypto companies also face strict regulations and will be prosecuted for violations. The most important law regulating finance is the Bank Secrecy Act, a 1970 anti-money laundering compliance law that applies to crypto transactions. For example, major crypto exchanges such as BitMEX have been sued for violating this law, as explained by the Financial Crimes Enforcement Network.
“By imposing a $100 million penalty on BitMEX last August, we hope to send the message that the BSA applies to institutions dealing with digital assets and cryptocurrency in the same way as it does to those that deal with fiat currency,” Him Das, acting director of FinCEN, said in January 2022.
Ensuring data security is not strictly a matter of having a strong cybersecurity provider, advice and legal consultation should be taken when adapting to edge computing. Additionally, data laws are constantly changing and compliance requires continuous review.
Security Risks and Benefits of Edge Computing
With the rise of IoT and edge-connected devices, an organization’s digital attack surface is increasing. Cybercriminals tend to look for the weakest entry point into a network and can hack IoT and smart devices. As a result, organizations now face the increased challenge of monitoring and securing all of their endpoints within their edge network.
Microsoft explains that edge computing reduces the risk of remote hacking by storing data locally on the device or offline in a nearby edge center. However, securing all devices in edge computing is not only a digital challenge, but also a physical one. Edge devices that are stored in one location (for example, virtual tellers in bank branches or edge nodes) must be physically secured to prevent on-premises breaches. This can be costly and complex for companies deploying and managing their edge.
There are, however, several security advantages when using edge computing. STL Partners explains that edge computing can drive advanced data analytics for cybersecurity in real time, detecting suspicious activity and breaches as they occur, and taking action to stop the attacks.
Edge computing provides the speed and processing power needed to perform biometric authentication security. This can prevent payment fraud, a crime that represents a significant loss of value for the sector. Banks, merchants, and crypto companies have embraced biometrics as the ultimate security standard.
Technological developments that have increased have demanded and are directly responsible for the development of edge computing. Thirst for big data, instant transfer speeds, high security standards and new services without delay: economic transformation will continue to drive innovation.
Edge computing is a tool that facilitates AI, augmented reality, blockchain transactions, digital tokens, modern banking, digital exchanges, insurers and many more. While a business cannot be part of the contemporary financial trend without delving into edge computing, the risks and downsides of technology must be carefully weighed and weighed against the benefits.