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Satellite technology in the Banking industry

Satellite technology in the Banking industry

By John Ayor

In 1999, the Central Bank of Nigeria (CBN) commenced a change management programme to positioned it to discharge its mandate with the goals of ensuring monetary and price stability, issuing legal tender currency, maintaining external reserve to safeguard the international value of the legal tender currency, promoting a sound financial system, and finally to act as banker and provide economic and financial advice to federal government of Nigeria. This programme was anchored on the redesign of the business processes and deployment of appropriate technology infrastructure to support the business processes. The redesigned processes gave rise to the need to integrate and centralise the operations of the bank. For instance, the branches maintained their independent database of their transactions and only made return to the Head Office at the end of the business day for consolidation.

 

To achieve the desired efficiency, the following enterprise business applications were deployed with the attendant supporting network infrastructure among several including: Temenos T24 banking System for banking functions; Real Time Gross Payment System (RTGS) for funds transfer; Electronic Financial Analysis and surveillance System (eFASS) for monitoring the financial system; and Enterprise Resource Planning system (ERP) for the management of internal processes. To give effect to these enterprise applications, it became clear that a robust WAN connectivity of the branches to the Head Office was of necessity.

 

 

Deployment of VSAT in the Nigeria’s Central Bank

 

The connectivity of bank’s headquarters with all its branches nationwide through a Wide Area Network (WAN) was an integral part of the implementation of its Information System Strategy.   This entailed the deployment of a VSAT earth station in 2001 at the headquarter of the bank which serve as the communication hub and the installation of another earth station at every branch/location that needs to connect to the CBN network. A satellite transponder in orbit deployed by a satellite service provider such as INTELSAT facilitates the communication between earth stations. A satellite transponder can provide VSAT interconnectivity to earth stations located in a section(s) of the globe where it has coverage (footprint). During the project implementation, the choice of a satellite-based network was premised on a number of factors.

 

Firstly, a satellite-based network was considered to be the technology that would provide a more reliable network than a terrestrial network in our environment. Generally, a terrestrial network is always susceptible to some environmental and infrastructural effect which causes network outages. Most of the environmental factors such as physical fibre cuts, power outages and equipment failure at one or more repeater stations among others are eliminated in a satellite-based network, which uses space as medium    of connecting any two end points (nodes).

 

In addition, a satellite-based network has unlimited reachability as long as the satellite being used has a footprint within the network region. The effect of this is easy connectivity to remote locations by simply installing an earth station. However, two main downsides of VSAT are its high bandwidth cost and its slowness in transmission when compared with a land-based network. This is due to the inherent long distance that signals have to cover from an earth station to another earth station via the satellite transponder that is in orbit. This factor is   outside the control of any provider.

 

The VSAT was designed to integrate with the existing Private Automatic Branch Exchange (PABX) machine to enable inter-branch voice communications through the bank’s VSAT network, thereby saving cost on trunk calls for the Bank. Before the implementation of the VSAT WAN, the installed PABX in each of the Bank’s branches was used for inter-communication (intercom) between staff within a branch only while inter-branch calls were through the costly public telephone network PSTN lines. The VSAT was therefore as an added advantage for the CBN because in addition to the data transmission, inter- branch voice communication was made possible at no cost.

 

CBN Network Design, Expansion and Upgrade

 

The design of the CBN VSAT network is a star topology. To ensure high availability, therefore, there are central hubs installed; one in Abuja (the primary hub) and a fail over hub in Lagos. Traffic from all branches are automatically diverted to the fail-over hub should there be any major fault with the Abuja hub. Below is an illustrative schematic diagram for the CBN VSAT WAN.

In 2005, the bank embarked on a process re-engineering programme. On of the major outcomes of the programme was a change from a distributed processing model to a centralised processing strategy. Enterprise applications were deployed at the head office and were made accessible to the branch offices through the WAN. This led to increased IT usage by users saw a sharp increase in bandwidth demand. More CBN branches were also opened. Consequently, the need for adequate bandwidth and network expansion became inevitable.

Apart from upgrading the VSAT links, the need for faster network also became of immediate necessity. Also, dependence on one link to each branch became a high risk to CBN operations which had become heavily dependent on automated processes. As a result of these factors and CBN leverage on the rapid growth of telecommunications sector of the Nigerian economy, an additional WAN link, a fibre-based terrestrial WAN to each of the branches in the same star topology was installed. The VSAT and the terrestrial WANs are configured in auto-failover mode such that if any of the links is down, the other one takes over automatically. If, however, the two links are alive at the same time, the traffic is shared among the two links in an efficient manner.

It is important to mention that in order to reduce to the barest minimum, overdependence on a single vendor for the provision of WAN services, which provides a single point of failure, the bank adopted a multi-vendor provisioning strategy in order to spread its operational risks. Different vendors provide both the VSAT WAN as well as the Terrestrial WAN.

 

WAN Optimisation

As a result of continuous contending demand on the WAN capacity following the centralised IT resource usage, which includes accessing various applications, unified communications (data and voice), optimising the current network infrastructure becomes a necessity. A WAN optimisation solution was implemented on the WAN links which used compression and caching techniques on packets transmitted over the WAN. This   has significantly improved the performance of the links, especially the VSAT WAN. In addition to the optimization, Quality of Service (QoS) is applied on the network.

Although the bank currently has high speed terrestrial Wide Area link to all of its branches, the VSAT communications links has in many occasion proves to be an invaluable means that the bank has relied on in providing services to its customers. In addition, it has also helped in enhancing the efficiency of operations of the bank by providing additional capacity in handling traffic from each location to and from the CBN HQ even when the high speed links are available.

In conclusion, the Banks operations have been positively impacted by the deployment of the VSAT communications links to support its operations.

 

John Ayor is the Director, Information Technology Department, Central Bank of Nigeria, Abuja