Time Will Be Of The Essence: Post-change freeze timing solutions in financial services

While it may feel like the world is on standstill, Financial Services cannot afford be short sighted when considering their vital infrastructure. Once the current change freeze environment comes to an end, firms will not only need to catch up on lost time, but compensate for lost revenue. Both ease and cost-effectiveness will be top of the agenda in the finance world, and companies should start preparing now to ramp up operations with reliable infrastructure that keeps budgets in check.

The world of finance is more reliant than any on verifiable and trustable data. When handling millions of transactions and our most sensitive personal data, the industry must be at the forefront of responsible data management. A new frontier in this area comes from hash ledger technology in partnership with traceable time. The integration of a verifiable timestamp into hash ledgers adds a new dimension of security and traceability. Hashing ensures that the sequence of events in a ledger cannot have happened in a different order; an entire ledger cannot be fabricated because it is interwoven with other ledgers.

When an action is applied to an individual’s personal data, such as sharing it with a third party, a timestamp (that is verifiable back down a chain of comparisons to UTC) can be attached and the event tracked. By creating a verifiable record of how personal data has been used, data protection can be better enforced.

In a 2019 Deloitte report hefty GDPR fines ranked as a serious concern for Financial Services. These fears have become reality for banks and other financial institutions across the European Union, including a 2.6 million euro penalty for the Bulgarian National Reserve agency in September 2019.

As creating traceable and trusted data becomes more important to compliance and regulation, having accurate and verifiable time is increasingly necessary when virtual events have physical impacts for which someone must be held accountable. Highly accurate timing offers a new to help enforce data protection regulations like GDPR.

Particularly in Financial Services, where thousands of transactions take place every second, the results of unsynchronised clocks can be chaotic. A transaction can appear to arrive at the recipient before it left the sender, two parties may disagree over the timeline of events and disputes cannot be easily resolved. This is the problem MIFID II and CAT seek to solve in Financial Services. These regulations mandate that the clocks on servers that govern these transactions cannot stray from UTC by more than 100 microseconds or 50 milliseconds respectively. A software timing solution keeps clocks from drifting by maintaining a constant connection to several sources of UTC, both satellite and terrestrial. This solution even produces compliance reports that can be audited by the regulator, making it easy and simple for Financial Services to be certain of their compliance.

A recent Gartner survey indicated that as high as 62% of CFOs have plans to reduce operating budgets and IT infrastructure will be an inevitable victim of financial pressures. But this isn’t necessarily as bad as it sounds. The need for cost reduction breeds innovation and efficiency, and the opportunity to explore alternative service at lower costs to meet the needs of Financial Services.

Even before physical restrictions are fully lifted, a software timing solution is easy to implement and scale remotely. Traditionally a data centre would install several grandmaster clocks with GPS antennas on the roof which distribute time in the data centre using Precision Time Protocol (PTP) to the servers needing synchronisation.  This costs approximately £75K a year to install and manage, requiring specialist skills. In addition to this, in many cases, antennas are impractical. Software can provide the same level of accurate synchronisation and deliver time directly from a global network of atomic clocks into the data centre.

Software based timing solutions not only offer a more efficient and scalable solution at a reduced cost, but have the potential to create more traceable and trusted data in conjunction with blockchain. Financial services do not have to compromise on resilience or quality of service in order to cut costs in a new budget constrained environment. A simple ‘plug and play’ timing solution is just waiting in the wings ready for when this change-freeze ends.”


By Richard Hoptroff, Founder and CTO, Hoptroff

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