Challenger banks have a ‘new starter’ advantage over the well-established Big Four (HSBC, Lloyds, Barclays and Royal Bank of Scotland) in that they are not tied down to existing infrastructure and legacy systems. As banks try to shift their expenditures from Capex to Opex, especially following the 2008 global recession and Brexit uncertainty, more are turning to services offered by third party data centre providers. Challenger banks however are already well established in this area owing to the reduced costs and greater flexibilities afforded to them.
“Not bound by on premise legacy IT infrastructure like the traditional banks gives challenger banks a great opportunity to capitalise on the savings provided by third party data centres,” says Greg McCulloch, CEO of Aegis Data. “By not having the cost burdens associated with running their own data centre including power, cooling, staff, footprint – challenger banks can save huge expenditures by moving to a colocation facility.”
“By using a third party provider, challenger banks are afforded greater flexibility in the number of racks and servers they use, allowing a scalable pricing model to be implemented. Again, this brings greater savings as they are only paying for what they use, compared with traditional banks who operate their own site and account for all the running and maintenance of this, regardless of their usage.”
With the continued rise of cloud computing and the move towards greater virtualisation, traditional banks will be looking to decommission their enterprise data centres and legacy IT infrastructure and move over to colocation providers in order to reduce costs and overheads.
“Challenger banks really got ahead of the big banks by not committing themselves to on premise systems or expensive hardware purchases. Instead, partnering with colocation providers has enabled them to stay flexible in times of economic uncertainty and make greater savings that have been turned into rewards for their customers. As banks start to call time on legacy systems, we can expect to to see a greater number moving across to third party providers,” concluded McCulloch.
