Europe's Banks Putting Their Money on Voice over IP (VoIP)
Lloyds TSB Shows how Voice and Data Convergence is Vital to the Long-Term Efficiency of Networks
By Jason Deign, News@Cisco
-/23 Dec, 2004 - The Wi-Fi Technology Forum/-Europe's banks are putting their money on voice over IP (VoIP). According to Datamonitor's September 2004 Networking in European Financial Services report, the number one long-term priority for finance-related companies in Europe is the convergence of voice and data.
And leading the pack is a major UK bank, Lloyds TSB, which on December 6 went public with plans to introduce almost 70,000 VoIP phones from Cisco Systems®, one of the largest implementations to date in Europe, as part of a £500 million (US$969 million) contract with IBM.
Lloyds TSB has more than 15 million customers worldwide and the largest multi-channel distribution network in the UK, with more than 2,000 branches, around 4,200 cash-points and a telephone banking operation that handles 60,000-plus calls every day.
The bank currently operates a voice infrastructure that comprises traditional private automatic branch exchange switches, the public switched telephone network, remote access services, VPNs and managed services, with approximately 30 supplier contracts with various suppliers.
Its current WAN only supports data traffic. Although historically the network has supported many protocols and technologies, today it is an IP/Ethernet only environment, with the main focal point being large data centers.
The new, seven-year contract will see all the bank's UK voice and data traffic being handled over a single dedicated fiber and Cisco DSL and Multiprotocol Label Switching (MPLS) network with direct links to mobile and call centre services.
Critical components of the infrastructure will include Cisco 7940G IP Phones, Cisco Catalyst® 6509 and 3560 switches, Cisco Aironet wireless access points, Cisco firewalls and Cisco CallManager Version 4.0 software for call processing.
The bank will also be using a range of Integrated Services Routers, including the Cisco 1800 Series for ATM support and in small branches; the Cisco 2800 Series in medium branch offices; and the Cisco 3845 in larger locations.
Finally, the network will include Cisco CSS 11500 Series Content Services Switches and Cisco Content Engine Modules for e-learning, caching and advertising applications.
It will take 20 months to build and be managed by IBM in association with Vanco, a global virtual network operator, and Vtesse Networks, a gigabit optical networking provider.
The network convergence and switch to Cisco IP telephony will reduce Lloyds TSB's operating costs, while providing a flexible, variable-cost, high-bandwidth, on-demand communications infrastructure that will support the bank's evolving business requirements.
Lloyds TSB's move to a unified network infrastructure was helped by a new tariff model developed by IBM, Cisco, Vtesse and Vanco, which takes account of a number of factors, many of which are particular to the UK market.
Across the UK, more than 40,000 miles of fiber optic cable have been laid by a wide number of different carriers. However, only about five percent of this is currently used.
Meanwhile, regulation has forced the main operator in the UK, BT, to provide an inflexible tariff structure, which does not meet many of the demands of enterprise customers and makes high-bandwidth, converged voice and data services particularly expensive.
Using existing fiber optic infrastructure, IBM, Cisco, Vtesse Networks and Vanco were able to offer Lloyds TSB a national dedicated network that exploits available optical bandwidth to provide a converged voice and data service that is unconstrained by traditional tariff structures.
The converged IP infrastructure consists of three main wide area building blocks, all with an encryption capability: a Wave Division Multiplex (WDM) core, an MPLS network and a private DSL network.
Vanco will provide the integration of the various technologies and underlying telecommunications suppliers. Network management services provided will also include capacity planning, change management, fault management and real-time reporting.
IBM is working as a business and systems integrator with Vtesse Networks to provide a virtual private network core between primary sites, which will be directly inter-connected using high-bandwidth optical fiber from a selection of carriers, to provide both flexibility and cost efficiency.
The advantages that the new environment is able to offer include performance, with almost limitless bandwidth; efficiency, with an expected eightfold increase in throughput for a quarter of the previous overall cost; scalability and flexibility; service guarantees; and service flexibility.
It is clear that Lloyds TSB need not necessarily be the only bank in the UK to take advantage of this network.
But even in other countries there are compelling reasons to move to a converged infrastructure, as can be seen by other recent announcements from Cisco on major IP telephony deployments.
These are global, and not just in financial services, but also in sectors such as manufacturing, with 4,500 phones at Boeing; retailing, with 40,000 telephones across Media-Saturn's store network; or media, with more than 4,600 phones at Reuters.
To date, Cisco has shipped more than 4 million IP phones, replacing traditional phones at a rate of 6,000 a day, with more than 450,000 units arriving in the European region in the past 12 months alone.
"For companies with large, highly-distributed networks, IP telephony can offer significant savings through both lower administrative costs and reduced management complexity," says Chris Dedicoat, senior vice president at Cisco.
"For Lloyds TSB, the adoption of IP telephony will enable them to drive a profound transformation in their business communications by combining voice, video and data into a rich media experience."
Igor Andronov, director of IT at Lloyds TSB, adds: "This project will allow us to increase the cost efficiency and enhance the flexibility of our IT infrastructure, by providing our staff with a more efficient and responsive service for our customers."
Jason Deign is a freelance journalist located in Barcelona, Spain.
Source: Cisco
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