5 fintech trends you should be watching in 2023

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In the fast-paced world of global financial services, gaining competitive advantage is a synonym to staying ahead of the curve. With banks, stock exchanges, credit institutions, investment firms still struggling in their push for innovation, fintech startups are sprouting everywhere, deploying groundbreaking technology, and questioning traditional banking. With that in mind, let’s take a look at 5 fintech trends that will undoubtedly shape the future of global financial services. 

1. Accurate and precise time synchronization

There are over 100 billion microprocessors with clocks but they aren’t all displaying the correct time. As the world’s critical infrastructure and global financial markets become more digitised, this incongruence becomes more worrying.

In a distributed computing environment, it is impossible to determine what caused what unless all devices’ clocks agree and the billions of daily transactions are time stamped accurately.

Time is distributed through the global network satellite system (GNSS) which has come under criticism in recent years due to its vulnerability. A slight interference in this system could cause major disruptions in navigation and global trading activities, not to mention added complications when investigating the sequence of transactions in suspicious trading, or the proof of accurate timing needed to be MiFID II and CAT compliant.

Precise and resilient software-based time from both satellite and terrestrial sources addresses this vulnerability. Hoptroff’s Traceable Time as a Service (TTaaS®), synchronizes server clocks to UTC through both satellite and terrestrial sources. It’s more resilient, scalable, and more easily deployed requiring no additional hardware.

This article will touch upon four more fintech trends of 2023, and why accurate and precise time synchronization is the key to their development.

2. Cryptocurrency

The speed and convenience at which transactions are processed is becoming increasingly important. This has opened the door to digital, or crypto currencies and real time payments (RTPs).

Cryptocurrency transactions are recorded on a decentralised ledger or blockchain and although they’re not easily accessible to everyone, this will change as banks open their virtual doors.

CBDCs are a form of digital currency centrally controlled by national banks, backed with real money and issued over blockchain. China is already piloting their CBDC eCNY in four cities and is anticipated to introduce it fully in 2023.

Why accurate and precise time synchronization matters in cryptocurrency

While CBDCs are regulated by a country’s central bank and should therefore encourage financial inclusion, their centralised nature means certain design choices could increase anonymity for individuals involved in nefarious activities. This is why accurate time stamping at the point they are exchanged to and from real cash is so important. This is not possible without accurate and precise time synchronization.

Many central banks are already looking into the assurances offered by timestamping every transaction of CBDCs rather than only when the digital currency is exchanged for real cash.

3. The Metaverse

No one is denying the revolutionary potential of the Metaverse. As a digital 3D space designed for virtual interactions it holds the key to countless new opportunities for fintech companies. Although a boost in sales productivity may be expected as people will be able to meet face-to-face with clients from around the world in a single afternoon, added convenience comes with complications.

As cross-border teams collaborate, the online software tools through which they interact need to be reliable – this begins with precise timing synchronization. Whether it’s Google Docs or a new haptic tool, devices showing different times can cause unnecessary difficulties when collaborating through the Metaverse.

Why accurate and precise time synchronization matters in the metaverse.

The metaverse must be a real-time system over computing distributed all around the world. That can’t possibly work unless the processing and data flow are synchronized through precise timing.

4. Smart contracts

Smart contracts are locked software programs stored on a blockchain. These programs begin actions automatically following the completion of contractual obligations. Such actions could include paying both sides a sum in cryptocurrency, or simply releasing protected data to one party involved. This negates the need for an intermediary such as an escrow, in which funds would ordinarily be held by a third party until the conditions are met.

This fintech trend expects companies to further test the utility of smart contracts in 2023. Decentralised finance (DeFi) and other companies may wish to investigate how smart contracts safeguard transactional security and resilience in global financial services.

Why accurate and precise time synchronization matters for smart contracts

Cryptocurrency ensures the record of the digital ledger cannot be modified after the fact, even by the ledger owner, without it being obvious that it has been modified. Hoptroff TTaaS® can provide time for crypto traders by putting trusted and traceable timestamps in the ledger so there can be no doubt about when events happened – as it stands right now, the ledgers only prove the sequence in which events happened, not precisely when.

5. Machine Learning Operations (MLOs)

Machine learning employs algorithms to help computers and other machines understand and predict the behaviours and intentions behind digital interactions.

Innumerable figures and endless calculations drive the fintech industry meaning it will likely be a primary beneficiary of MLOs in 2023. The enormity of this data requires complex and intelligent analysis and reporting. This would be incredibly costly and time consuming using traditional rule-based computing that relies on constant human input.

MLOs are already transforming global financial services areas like risk management, fraud analysis and sales forecasting.

Why accurate and precise time synchronization matters for MLOs

Improving data reliability betters the AI model. Most data is collected in a delayed fashion, so to understand interactions between, for example, various sensors, those sensors need traceable and secure timestamps to bring the picture into focus.

Ready to learn more? 

When thousands of transactions and data get processed every second, a high-level of accuracy and reliability is required for critical infrastructure services. Accurate timing solution like Hoptroff Traceable Time as a Service is ready to be rolled out without the purchase and installation of additional timing infrastructure.

(TTaaS®) is a range of network and software-based timing solutions that are simple, resilient, and cost-effective.

Whether you need the security of verifiable time for compliance, or precision timing in your IT network and business-critical documents, our obsession with accuracy will transform your business.

Troubleshooting Cheat Sheet: Layers 1-3

Any time you encounter a user complaint, whether regarding slow Internet access, application errors, or other issues that impact productivity, it is important to begin with a thorough understanding of the user’s experience.

Not sure where to begin?  User complaints usually fall into three categories: slow network, inability to access network resources, and application-specific issues.

Based upon the complaint being presented you need to understand the symptoms and then isolate the issue to the correct layer of the Open Systems Interconnection (OSI) model.

The following Troubleshooting Cheat Sheet shows the questions to ask with a typical slow network complaint.

What to Ask What it Means
What type of application is being used? Is it web-based? Is it commercial, or a homegrown application? Determines whether the person is accessing local or external resources.
How long does it take the user to copy a file from the desktop to the mapped network drive and back? Verifies they can send data across the network to a server, and allows you to evaluate the speed and response of the DNS server.
How long does it take to ping the server of interest? Validates they can ping the server and obtain the response time.
If the time is slow for a local server, how many hops are needed to reach the server? Confirms the number of hops taking place. Look at switch and server port connections, speed to the client, and any errors.

Quick OSI Layer Review

With these questions answered, working through the OSI model is a straightforward process. When dealing with the different layers, understanding how each layer delivers data and functions will impact how you would troubleshoot each layer.

Physical Layer

  • If it can blind or shock you, think Physical Layer
  • Defines physical characteristics of cables and connectors
  • Provides the interface between network and network devices
  • Describes the electrical, light, or radio data stream signaling

Data Link Layer

  • Converts signals into bits which become the packet data that everyone wants
  • Performs error detection and correction of the data streams
  • Manages flow and link control between the physical signaling and network
  • Constructs and synchronizes data frame packets

Network Layer

  • Controls logical addressing, routing, and packet generation
  • Carries out congestion control and error handling
  • Performs route monitoring and message forwarding

Assessing the Physical Layer

Generally speaking, Physical Layer symptoms can be classified into two groups of outage and performance issues. In most cases, investigating outage issues is the easiest place to begin, as it’s a matter of confirming the link light is out or that a box is not functioning. Additionally, validating equipment failure is a matter of replacing the cable or switch and confirming everything works.

Physical Layer issues are overlooked by people pinging or looking at NetFlow for the problem, when in reality it’s a Layer 1 issue caused by a cable, jack, or connector.

The next step in investigating Physical Layer issues is delving into performance problems. It’s not just dealing with more complex issues, but also having the correct tools to diagnose degraded performance. Essential tools in your tool box for testing physical issues are a cable tester for cabling problems, and a network analyzer or SNMP poller for other problems.

Assessing Physical Performance Errors

In diagnosing performance issues from a network analyzer, you’ll notice that there are patterns common with these errors, which are usually indicative of what’s causing the Physical Layer problem. These can be divided into intelligent and non-intelligent errors.

Intelligent Errors: An intelligent host is smashing into your network signal and corrupting the data.

Example: Overloaded WiFi network or a busy channel.

Non-Intelligent Errors: An outside entity causing noise that interferes with the signal or flow of data across the network.

Example: A microwave interfering with a WiFi signal.

Climbing Further up the Stack

Confirming performance problems, taking a systematic approach to troubleshooting, and understanding how communication occurs across the layers of the OSI model are key to slashing troubleshooting times and improving resolution accuracy.

Load Balancing Your Security Solution for Fun and Profit!

Maximizing the Value and Resiliency of Your Deployed Enterprise Security Solution with Intelligent Load Balancing

Correctly implementing your security solution in the presence of complex, high-volume user traffic has always been a difficult challenge for network architects. The data in transit on your network originates from many places and fluctuates with respect to data rates, complexity, and the occurrence of malicious events. Internal users create vastly different network traffic than external users using your publically available resources. Synthetic network traffic from bots has exceeded real users as the most prevalent creators of network traffic on the internet . How do you maximize your investment in a security solution while gaining the most value from the deployed solution? The answer is intelligent deployment through realistic preparation.

Let’s say that you have more than one point of ingress and egress into your network, and predicting traffic loads it is very difficult (since your employees and customers are global). Do you simply throw money at the problem by purchasing multiple instances of expensive network security infrastructure that could sit idle at times and then get saturated during others? A massive influx of user traffic could overwhelm your security solution in one rack, causing security policies to not be enforced, while the solution at the other point of ingress has resources to spare.

High speed inline security devices are not just expensive—the more features you enable on them the less network traffic they can successfully parse. If you start turning on features like sandboxing (which spawns virtual machines to deeply analyze potential new security events) you can really feel the pain.

Using a network packet broker with load balancing capability with multiple inline Next Generation Firewalls (NGFW) into a single logical solution, allows you to maximize your secruity investment.  To test the effectiveness we ran 4 scenerio’s using an advanced featured packet broker and load testing tools to see how effective this strategy is.

TESTING PLATFORM

Usung two high end NGFWs, we enabled nearly every feature (including scanning traffic for attacks, identifying user applications, and classifying network security risk based on the geolocation of the client) and load balanced the two devices using an advanced featured packet broker. Then using our load testing tools we created all of my real users and a deluge of different attack scenarios.  Below are the results of 4 testing scenerios

Scenario One: Traffic Spikes

Your 10GbE NGFW will experience inconsistent amounts of network traffic. It is crucial to be able effectively inforce security policies during such events. In the first test I created a baseline of 8Gbps of real user traffic, then introduced a large influx of traffic that pushed the overall volume to 14Gbps. The packet broker load balancer ensured that the traffic was split between the two NGFWs evenly, and all of my security policies were enforced.

Load Balancing Your Security Solution for Fun and Profit!

Figure 1: Network traffic spike

Scenario Two: Endurance Testing

Handling an isolated event is interesting, but maintaining security effectiveness over long periods of time is crucial for a deployed security solution. In the next scenario, I ran all of the applications I anticipated on my network at 11Gbps for 60 hours. The packet broker gave each of my NGFWs just over 5Gbps of traffic, allowing all of my policies to be enforced. Of the 625 million application transactions attempted throughout the duration of the test, users enjoyed a 99.979% success rate.

Load Balancing Your Security Solution for Fun and Profit!

Figure 2: Applications executed during 60 hour endurance test

Scenario Three: Attack Traffic

Where the rubber meets the road for a security solution is during an attack. Security solutions are insurance policies against network failure, data exfiltration, misuse of your resources, and loss of reputation. I created a 10Gbps baseline of the user traffic (described in Figure 2) and added a curveball by launching 7261 remote exploits from one zone to another. Had these events not been load balanced with the packet broker, a single NGFW might have experienced the entire brunt of this attack. The NGFW could have been overwhelmed and failed to inforce policies. The NGFW might have been under such duress mitigating the attacks that legitimate users would have been collateral damage of the NGFW attempting to inforce policies. The deployed solution performed excellently, mitigating all but 152 of my attacks.

Concerning the missed 152 attacks: the load testing tool library contains a comprehensive amount of undisclosed exploits. That being said, as with the 99.979% application success rate experienced during the endurance test, nothing is infallible. If my test worked with 100% success, I wouldn’t believe it and neither should you.

Load Balancing Your Security Solution for Fun and Profit!

Figure 3: Attack success rate

Scenario Four: The Kitchen Sink

Life would indeed be rosy if the totality of a content aware security solution was simply making decisions between legitimate users and known exploits. For my final test I added another wrinkle. The solution also had to deal with large volume of fuzzing to my existing deluge of real users and attacks. Fuzzing is the concept of sending intentionally flawed network traffic through a device or at an endpoint with the hopes of uncovering a bug that could lead to a successful exploitation. Fuzzed traffic can be as simple as incorrectly advertised packet lengths, to erroneously crafted application transactions. My test included those two scenarios and everything in between. The goal of this test was stability. I achieved this by mixing 400Mbps of pure chaos via load testing fuzzing engine, with Scenario Three’s 10Gbps of real user traffic and exploits. I wanted to make certain that my load-balanced pair of NGFWs were not going to topple over when the unexpected took place.

The results were also exceptionally good. Of the 804 million application transactions my users attempted, I only had 4.5 million go awry—leaving me with a 99.436% success rate. This extra measure of maliciousness only changed the user experience by increasing the failures by about ½ of a percent. Nothing crashed and burned.

Load Balancing Your Security Solution for Fun and Profit!

Figure 4: Application Success rates during the “Kitchen Sink” test

Conclusion

All four of the above scenarios illustrate how you can enhance the effectiveness of a security solution while maximizing your budget. However, we are only scratching the surface. What if you needed your security solution to be deployed in a High Availability environment? What if the traffic your network services expand? Setting up the packet broker to operate in HA or adding additional inline security solutions to be load balanced is probably the most effective and affordable way of addressing these issues.

Let us know if you are intrested in seeing a live demonstration of a packet broker load balancing attacks from secruity testing tool over multiple inline security solutions? We would be happy to show you how it is done.

Additional Resources:

Network Packet Brokers

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