June 28, 2013

Today, financial institutions have capitalized on the multitude of online services made possible by cloud computing. A vast majority of banks, for instance, have integrated online banking as a service to their customers. Banks that currently host their own cloud services can face an overwhelming increase in costs, as more consumers make the shift to online banking. Financial institutions that are looking for ways to save costs and maintain a competitive advantage, through superior service, can find solutions in their approach to data storage infrastructure.

Cost-Benefit Analysis

In response to the growing trend of online banking, many financial institutions are moving their data centers to a centralized environment. In this scenario, data is stored in an independent location and made universally available via the Internet. Consolidating these data centers allows financial service providers to maintain a low-cost structure, while providing users with enhanced connectivity, performance and reliability.

Despite the obvious benefits of this solution, scalability often becomes more difficult and cost-sensitive. Improving performance within a centralized data center requires large investments. In order to achieve enhanced functionality, financial institutions would need to purchase additional high-performance, specialized equipment, which ultimately raises costs and energy consumption. These added expenditures are unacceptable to financial service providers who are seeking cost-cutting strategies.

Once financial organizations offer cloud-based services to their users, the demand on data centers increases dramatically. In a cloud environment, servers begin to experience performance constraints once an influx of users simultaneously tries to gain access over the Internet. Thus, financial institutions not only have to scale their storage systems to accommodate additional users, but they must also provide uniform performance to all parties.

Merging Best Practices

In order to maintain a competitive edge, banks must find a way to accommodate the thriving demand for increased data storage, as well as access to the data. Financial organizations pursuing data storage alternatives should opt for a combination of scalability, performance and cost-effectiveness. In an era of IT cutbacks, the following best practices may help maximize data center ROI:

  • Seek Out Distributed Storage: Distributed storage presents the best scalability solution even though the data center trend has been moving toward centralization. This is made possible by advancements at the software level that counterbalance the performance advantages of a centralized data storage approach.
  • Choose Commodity Components: Low-energy hardware makes good business sense. Commodity-component servers cost less and conserve energy, thus significantly reducing both operating and setup costs.
  • Avoid Constraints at All Costs: A single point of entry can easily become a performance constraint. Adding caches to alleviate the constraint, as most data center architectures currently do, adds cost and complexity to a system very quickly. However, a horizontally-scalable system that distributes data among all nodes delivers a high-level of redundancy, eliminating bottlenecks.

Financial institutions are working hard to serve their customers through cloud-based services, whilst maintaining high-quality performance. Finding the middle ground between sustainable performance and cost-effectiveness can be a struggle. Currently, data storage architectures consist mainly of high-performance, vertically-scaled systems. For financial institutions looking to cut costs, data centers that only scale to a single-petabyte and are made up of expensive servers will only inhibit business goals. Making the shift to a horizontally-scaled system, that distributes data evenly across lower energy hardware, benefits organizations by reducing costs and increasing performance. By putting these best practices into effect, financial institutions will find that improving performance, scalability and efficiency of their data centers is an attainable goal.

Stefan Bernbo is the founder and cEO of Compuverde