Keeping the unseen infrastructure behind UK banking on track
It handles ¤6 trillion annually and pays out 95 per cent of the salaries in the UK, but few people have heard of VocaLink
Ever heard of a British company called VocaLink? Chances are, you haven’t, even though much of the UK’s financial system rests on its transaction infrastructure.
“We do stuff for everyone, but no one knows who we are, ” says Marc Terry, managing director of transaction services for VocaLink.
The company was formed out of a 2007 merger between Voca Limited and LINK Interchange Network Limited (LINK), which ran the national ATM network in Britain.
Through the Switch network, it now manages the 65,000 devices on the UK’s ATM network, of which about 25,000 are “iAdds” – the ATMs found in locations such as convenience stores or petrol stations, which charge a nominal amount for a transaction.
Every British bank is connected to Switch. “That’s important, because it creates ubiquity. I can use my ATM card in any bank in the UK,” Terry says.
But VocaLink is far more deeply embedded in the banking system than that. It also manages financial transactions between banks, and has the “operational oversight” for the Bank of England, making it a critical technology pillar for the entire British financial system.
It handles 10 billion transactions a year; by comparison, he says, all of Visa Europe does 11.5 billion a year. Overall VocaLink handles €6 trillion annually and, via direct deposit systems, pays out 95 per cent of the salaries in the UK.
And yes, he says, it was involved in trying to sort out the NatWest payments issue earlier this year, when a software problem delayed transactions in Britain and also affected Ulster Bank customers in Ireland.
“I hasten to add it was an internal NatWest issue,” he says, not a problem with VocaLink infrastructure.
Unsurprisingly, Terry says security is “absolutely number one on the priority list”, which involves protecting both the network of machines and the infrastructure needed to ensure their operation.
This includes three data centres, whose location the company will not reveal beyond stating that they are in north London, “further north, and somewhere in the northeast”. It runs Oracle’s big data Exalogic hardware and software solution for handling the volume of data and transactions.
Despite the current focus on cloud computing – the trend towards using hardware and software infrastructure managed by others, which might be located anywhere in the world – VocaLink is “not in a position to consider that”, preferring to manage its own infrastructure for security reasons.
However, the company mostly avoids a major area of potential security risk because it doesn’t retain and manage sensitive customer data at all.
“We authorise transactions, but we don’t actually hold any data from the point-of-sale point of view,” says Terry. “We do not need to hold the data – we need to move the data.”
Because VocaLink is the single point of connection between every bank and bank customer in the UK, Terry says the company is keen to consider how financial transactions might be handled in new ways.
“We’re in a very privileged position to do things that are a bit more innovative,” he notes, pointing to the initial move in 2008 to introduce Faster Payments, a UK-wide instant payment system which came on the back of the government indicating that it believed banks needed to handle financial transactions more quickly for customers.