Banks have long been built on massive amounts of data. But as "big data" gets even bigger, legacy storage systems are growing increasingly inefficient and even obsolete, according to industry experts.
In fact, financial institutions will have to completely rethink and recreate the way they store data to effectively deal with the crush of information they possess, says Barbara Murphy, CMO of Panasas, a Sunnyvale, Calif.-based data storage provider. "The challenge that the banking industry has in consolidating different data types is, can you take all the different file types and have them rest in a single location?" she notes. "You need the scalability that can handle that, which traditional systems don't have. Infinite scale is now a requirement. There needs to be an entirely different architecture."
[For more on managing and sharing data across departments and consolidating reporting systems, see related article.]
Financial services firms now recognize the emergent need for quick access to centralized data, and they are not content to propagate the traditional model of storing data in multiple silos, Murphy adds. "Our customers are asking for one huge, big system where all the data they could ever want is on that system," she says. "That's a very different model [from] the traditional storage system model."
John Macaluso, SVP of bank solutions for Fiserv (Brookfield, Wis.), says it is the need for data access that compounds the big-data storage problem. "Historically, data was accumulated and stored, but now it needs to be accessible," he explains. "The biggest problems banks have is that data, in many cases, is siloed and in disparate locations. The magic is being able to bring that together and allow that data to become useful for them."
Macaluso notes that for many banks, having a functional data storage system that is appropriate for the era of big data is a high priority. "The banks I speak to, they are continually looking at ways to address this; in many cases it is the top item on the list," he says. "Data storage and warehousing are the top problems they are looking to resolve. Banks are definitely beginning to identify the problem and the opportunity it presents."
Legal and Compliance Drivers
One of the biggest drivers of the search for a new data storage paradigm among financial services organizations is legal and regulatory pressure, according to Ed O'Brien, director of banking channels for the advisory service at Maynard, Mass.-based analyst firm Mercator. Because banks may need to pull up prior communications in the event of litigation, or need quick access to disparate data to run required risk management models, they need quicker access and connectivity among many sets of data, he explains.
"There has to be a new way to index and capture data," O'Brien says. "The pipes aren't that large, and the data is huge."
Compliance issues are forcing banks to enable various departments to access and share the same data, adds Fiserv's Macaluso. "It's not just about how you store data, but how you provide employees access to the different subsets to help them do their jobs," he says. "The key is having a single source of data that you can subdivide to get useful bits of information by department. In the past it was easier, but now, with the amount of data that exists, it's more difficult."
O'Brien adds that it's not just regulatory and legal issues that are pressuring banks to move to consolidated, easily accessible data storage systems. Banks, especially considering the anti-Wall Street zeitgeist of the day, he says, are especially wary of negative public relations and rely heavily on data, particularly from social media, to manage reputational risk. Banks need to be able to store and access all data, especially unstructured data, pertaining to them in order to effectively manage reputational risk, O'Brien insists.
And as more and more data from a growing number of sources continues to accumulate, adds Panasas's Murphy, the way banks store it needs to continue to evolve. "We are just on the cusp overall of the big-data phenomenon," she says. "There will be a change in how we write computer programs, how we store data, and many other technological changes around big data."