To IP or not, that is the question

Although there are some forerunners adopting IP-based solutions in the banking sector, most are still sitting on the sidelines waiting for more favorable incentives to make the migration. This article delves into the hearts of banks to understand their hesitation in regards to IP migration.

SLOW IP ADOPTION AMIDST ONLINE BANKING GROWTH
Banks are no strangers to advances in information technology. For example, mobile banking through the internet is now widely adopted by bank customers and hailed for its convenience. Banks and their customers alike have come to trust and rely on mobile banking and the number of users has continued to rise steadily.

However, the adoption of IP technology for physical security solutions is less widespread despite the many benefits IP-based solutions can offer banks. “Through the surveys we have done with organizations within banking, we estimate that roughly 90 percent of the bank installations still use analog systems in the CIF 266 line format,” mentioned Dr. Magnus Ekerot, CEO of Mobotix.

Furthermore, for a sector that deals with such large sums on a daily basis, banks are not at the forefront in physical security technology. “This is surprising to many but a conclusion that recognizes the conservative nature of banking organizations toward physical security. It is also surprising that in general, banks have an inferior resolution quality,” added Dr. Ekerot.

BUYING CYCLE
Banks typically have five-year budgets but this may be longer in practice. Also, it may come as a surprise, but banks are not only more conservative when it comes to new technology adoption, but also in terms of security budgets.

“Retail banks typically don't have huge budgets for security and our research suggests that the cycle of new investments is around seven years,” commented Dr. Ekerot on Mobotix's research findings.

Moreover, new investments do not automatically translate to IP migration. “In many cases, an upgrade typically is to move from a poor-quality analog system to a slightly better quality analog system, but not an upgrade of the underlying infrastructure to allow the transition to more effective digital/ IP-based technology,” noted Dr. Ekerot.

END-USER CONCERNS
Myths aside, an important reason for banks to not adopt IP-based solutions for their security needs is because analog systems satisfy their current requirements. As mentioned, businessrelated transaction is the core of the banking industry and is prioritized over others. Most retail bank branches are not large-scale sites and do not require complex security systems to achieve real-time monitoring, unlike some large central banks.

Also, as transactions are central to the banking business with each transaction being a legally binding action, video footage only serves as one piece of evidence amongst others such as paper documents to protect against fraud.

Budget allocations reflect this prioritization and for many banks analog systems suffice their security and banking requirements. In addition, banks are also hesitant due to several of the following concerns — security, bandwidth, and cost effectiveness. It is then up to the system integrator to dispel these myths impeding the adoption of IP-based solutions by banks.

Security
One of the primary concerns over IP video is IT security. Security in the transaction network infrastructure is the core of the banking sector and they are understandably cautious over any addition to their enterprise network. Moreover, some banks may consider the IP network infrastructure another disparate system on top of their existing systems that their IT departments would now have to maintain network security and integrity for.

Bandwidth
Bandwidth consumption is another major concern for the banking industry. They cannot afford interruptions to their business-related internet traffic, as slowing down business-related traffic would translate to dollars lost. Hence, the belief that high-resolution video may impede business is slowing down the adoption of IP-based systems amongst banks.

Cost-Effectiveness
As with any other sector, cost-effectiveness is an important consideration when allocating budgets for banks. Faced with pressure to do more with less, many physical security managers are likely to stick to the tried-and-tested analog systems that continue to serve their security needs without straining their security budgets.

However, banks admit that they are not against “going IP”, but there are challenges that prevent them from making the transition. In fact, banks would like to have high-resolution video too, and many do see a future in that direction. However, at the moment, many feel that storage cost is an issue that has yet to be solved. For example, storing high-resolution data over a period of several months can be very taxing on their systems.

Outsourcing Security Equipment
Outsourcing security equipment can allow banks to address budgetary concerns, but its reception varies. The business model received a cool reception in Europe, mainly due to data privacy concerns. On the other hand,the idea is gaining acceptance amongst banks in the U.S. “I have seen a number of banks that are leasing equipment. The life expectancy of a video recorder is about five years, at which point the security department has to go back and request more money to replace their equipment. Under a lease agreement, the banks pay a monthly amount per branch and at the five-year mark, all of the recording equipment is replaced,” explained Chris Mullins, North American Inter-Company Sales Manager — Banking and Financial at American Dynamics (Tyco Security Products).

It could lower the total cost of ownership without compromising system quality, thus saving the bank bucks in the long run. “Because the cost of infrastructure installation is a one-time cost, the ongoing lease is often negotiated at a lower cost than the initial one. Video recorders are the most common items to be replaced, but banks can also choose to refresh their cameras as well as their recorders under a lease agreement,” added Mullins.

WHEN MEGAPIXEL IMAGES COME IN HANDY
Although analog systems are still prevalent in the banking sector, banks are beginning to embrace IP-based solutions, especially after experiencing the benefits of IP technology and understanding what it has to offer their businesses. “Surveillance cameras that are placed in lobbies and around ATMs can have multiple purposes; today their main purpose is deterring crime by their sheer presence in most cases,” noted Jenny Mansson, Business Development Director of Banking & Finance at Axis Communications.

In this scenario, images derived from analog systems are adequate for most of the banks' daily security needs. However, they fall short if there is an incident, such as a robbery or theft. “The video footage is also important for forensic use — in case of an incident, banks rely on surveillance cameras to provide an overview of the flow of events in combination with face shots for identification purposes,” continued Mansson. One of the advantages of network cameras then becomes obvious, as you can ensure high-quality pictures even in challenging lightning conditions.

“Banks are realizing that the best way to prevent robbery is to get high-quality video in the hands of law enforcement because robbery is rarely a one-time event; bank robbers are often repeat offenders so identifying them is critical,” said Mullins.

“If there is an incident, having the whole scene captured in high resolution allows better use of pan, tilt, and zoom for enhanced analysis in the video data archive. The main aim is to catch offenders, and with low-quality images, police simply cannot make an accurate identification or use the footage in court for evidence,” pointed out Dr. Ekerot. “[However], with 5-megapixel cameras, for instance, the scene is captured in evidential quality and it is a straightforward process to transfer the high-resolution video stream to a remote station even as police are responding. Officers can get useable images quickly and understand how many offenders are involved and what is or has just happened at the scene to progress an investigation quickly,” Dr. Ekerot added.

Megapixel technology also assists banks in transactions, such as settling claims and reducing fraud. “By tying network video to transactional data from the cash registers or ATMs, video footage that are related to a specific customer account or credit card number can be searched for and found in an instance. This is an important factor for banks in order to settle claims and reduce fraud,” said M?nsson.

BANKS RIPE TO TAKE ON IP TECHNOLOGY
Trial runs have proven successful in enticing more banks to adopt IP technology. “Many banks do an initial trial run, such as installing megapixel cameras in selected locations. Once they understand the benefits of higher quality video, they are very likely to make the migration,” noted Aaron Yeh, Director of Surveon Technology.

In instances where the banks do not have the budget to completely overhaul the investment made in the existing analog systems, they are still finding ways to migrate to IP-based solutions. “Because of the investment they have already made, they are keeping their analog cameras, but are switching to megapixel cameras in high-risk areas, and using megapixel units for new installations,” said Mullins.

Yeh feels that the market should be able to witness a noticeable uptake in IP-based solutions next year due to a number of factors. First of all, new security installations in the banking sector are increasingly opting for IP-based solutions at the onset. Next, the IT infrastructure, such as LAN is already in place as banks have evolved with technology in their business front. Hence, the costs and complexity of IP-based system installations have largely decreased.

Banks usually need to upgrade their facilities every two to three years to meet the updated IT environment/ requirements. The current cycle coincides with the maturity stage of IP surveillance and thus IP becomes the obvious choice. Moreover, despite the conservative stereotypical image associated with banks regarding security technology, most new installations are IP-based solutions.

REGIONAL ADOPTION RATE
Regionally, the adoption rate would undoubtedly be different. China has considerably more regulations regarding bank operations and not surprisingly, banks in China are more likely to embrace IP technology. “What we tend to see in China is a technology jump, as opposed to a gradual progress seen in most countries. For example, they migrated from D1 resolution directly to megapixel resolution,” said Yeh.

“China aside, the Middle East banking sector is also filled with opportunities. In the Middle East, even hotels are subjected to security system audits every two years, suggesting that banks are likely to have stricter regulations,” continued Yeh.

SLOW MIGRATION TO IP
Ultimately, banks may not be switching to IP technology by the masses at the moment, but they definitely do see it as the future. They understand the benefits, but costs remain an important consideration at the moment. However, helping banks understand the costs to benefits ratio of an IP-based system would do plenty to ease their hesitations.