This year, the Brazilian financial industry is preparing to experience the biggest disruption in its history: the expansion of Open Banking – a system that allows open access and control of consumer banking data through third-party applications. This ecosystem is organized and regulated by the Brazilian National Monetary Council and the Central Bank of Brazil through the Joint Resolution No. 01/2020 and has been initially available since late 2021.
A study released by PwC in December 2021 estimates that, by the end of 2022, Open Banking revenues worldwide shall reach $9,37 billion. In Brazil, specifically, there is an expectation of including millions of Brazilians who are still unbanked, in other words, people without a banking account. A report by the research company Instituto Locomotiva released in April 2021 showed that 21% of the Brazilian population – around 34 million people – have precarious access to the banking system. As it happened with the instant payment system PIX, which accelerated the digitization of banking operations, Open Banking is expected to be a game changer for people and businesses in 2022.
Through use of APIs (Application Programming Interfaces), Open Banking enables account holders to do business with different institutions without the requirement of being a registered customer in all of them. In this model, each account holder has full control of their financial data, being able to agree or disagree with the proposal of sharing their data with several institutions. The account holder of a particular bank can invest, apply for loans, or purchase insurance with other banks, brokers, fintechs and insurtechs. For this to happen, there is a heterogeneous, distributed critical digital infrastructure supporting data exchanges through the use of APIs.
An article published in January 2021 at a British finances news portal, Bobsguide, shows that, in November 2020, 5.7 million API failures happened within the hundreds of businesses which form this ecosystem in the UK. The article does not specify whether these failures were due to software or infrastructure issues. A downtime event in an Open Banking organization will inevitably lead the consumer to look, in milliseconds, for another organization to carry out the financial operation. Ultimately, anomalies in the API support could undermine the strength of any organization that is part of an Open Banking ecosystem.
Private, Public and Hybrid Cloud
In Brazil, the emergence of Open Banking accelerates changes that financial institutions were already adopting in relation to their data centers. It's a revolution in progress, and it won't end anytime soon.
For every financial organization, there is a cloud model that will suit its business and culture. An industry that traditionally owns its data centers (private cloud), large banks, brokers and insurance companies have moved towards a hybrid cloud model. Fintechs and insurtechs, on the other hand, are already born in the cloud, and can flexibly scale their digital infrastructures, adding more processing capacity as the business grows. A study by Redefinitiv consulting shows that, at the end of 2019, among Latin American countries, the financial industry in Brazil had invested the most in cloud services, accounting for 51% of investment.
One of the hallmarks of cloud computing is data and applications’ smooth flow from from one cloud to another, from one data center to another. It is a model for using digital resources that stands out for being fully customizable. In the Open Banking ecosystem, the need to decide which kind of cloud to adopt is driving IT leaders to design the critical infrastructure solution tailored to their organization goals and their business differentials.
There are elements that influence which cloud model to adopt, whatever the profile of the financial organization. One of the most strategic factors will be the rollout of 5G in Brazil. This will represent a leap in the acceleration of the country's digital economy and is driving the financial industry data center manager to simultaneously upgrade the core and edge data centers and infrastructure. This also means innovation from the design stage to implementation of interoperable power and air conditioning solutions and, ideally, managing this universe with the help of artificial intelligence (AI) and machine learning (ML) based software platforms. For the Open Banking ecosystem, the intense exchange of data based on APIs will demand high-levels of availability, or quality of services (QoS).
The Challenge of Managing Multiple Data Centers
All this evolution demands that the data center administrator needs to manage, with safety and control, the multiple and geographically distributed clouds/data centers that support the Brazilian Open Banking system. From the smaller fintech to the biggest bank, the challenge is the same: to keep the data center running 24x7, it is necessary to have a predictive vision of future failures or outages.
Monitoring services help in the achievement of this goal. These services offerings mix people – skilled data center professionals – and sophisticated monitoring solutions, platforms based on Artificial Intelligence and Machine Learning resources. The key concept is automation. It is the only way the data center manager can have visibility and control over the myriad of digital components (hardware and software) of its critical infrastructure. The goal is to manage the data center's performance, ensuring that energy, equipment and floor space are used as efficiently as possible. Detailed SLAs offered by the monitoring services and solutions vendor guarantee the full support to the financial organization data center.
Solutions Support Data Center Operations
The disruption brought by Open Banking to the Brazilian financial sector increases the criticality of data centers. If, for example, there is a power outage for any reason, it is essential to have uninterruptible power supply (UPS) systems capable of providing quality power to the operations’ most critical equipment.
A cause of downtime that can be avoided is related to the environmental conditions within the data center. The additional servers and other compute required to support the Open Banking data boom can raise data center temperatures, triggering the interruption of services. Precision air conditioning systems designed to support sensitive electronics in server rooms are the answer for controlling room and rack-conditions, so equipment does not heat overheat and cause failures. Many organizations are considering and selecting efficient and sustainable power and air conditioning solutions, to minimize the impact of the growing data centers on the environment.
To offer the best experience to customers – people and organizations that, in one click, can choose to do business with other participants of the Open Banking system – it is also recommended to have a critical infrastructure partner with service expertise. At a time when the Brazilian data center market is growing and resources are stretched, professionals trained and certified in data center management best practices and outsourced service offerings can support the infrastructure and free up resources for other strategic initiatives.
All these elements paint a challenging picture. On the one hand, the massive volume of data that will be processed by the thousands of participants of the Brazilian Open Banking system; on the other hand, constrained budgets and smaller data center teams required to deliver increasingly critical services. Whoever balances these issues will gain ground in Brazilian Open Banking and will support the growth of the Brazilian economy in 2022.
