In the era of digital banking, the efficient management and utilization of data have become crucial for financial institutions. One key aspect that empowers digital banking is data storage. Effective storage solutions enable banks to securely store and process vast amounts of data, leading to improved operational efficiency, enhanced customer experiences, and advanced analytics. Let’s explore how storage powers digital banking.
COVID caused a digitalization boom in the United Kingdom’s banking sector, with mobile apps seeing the biggest gains, according to research from UK Finance.org. The 81% of respondents polled by the study also pitched a bank’s online experience as a deciding element in their financial behaviour.
Challenger banks have also arisen as fierce competitors by putting a premium on providing an amazing digital-first service. Traditional banks must pay attention to this trend to stay competitive.
Banks have realized that achieving digital transformation requires more than technological breakthroughs. The industry must continually invest in its infrastructure to secure reliability and trust from its customers. A smooth user experience is essential to standing out in a booming market as more customers rely on online banking services. Effective storage solutions are the foundation of the digital banking ecosystem, supporting and maintaining efficient consumer access. The financial services industry can effectively meet the rising demand for digital banking services and provide a superior user experience for all consumers, regardless of age or demographic, by prioritizing customer experience and data security.
Age of storage: The big short
With the transition from paper-based records to storing consumer information online and in the cloud, customers’ interactions with their banks and financial institutions have changed significantly. In 2023, there will be about 5,000 banks on UK high streets, down 75% from the number of branches in the late 1980s, according to a recent Parliamentary discussion.
The conversion of traditional banks to digital platforms and the emergence of neo banks, banks that only conduct business online and have no physical locations, have greatly increased the amount of data and metadata produced. Consequently, these growing data volumes necessitate ongoing, scalable, and more creative storage solutions. The acquired data and storage requirements will vary depending on each bank’s digital operations. However, because of their increased online presence, all banks, whether neo banks or hybrids of brick-and-mortar and online, now need more reliable storage solutions to help them conduct their operations.
Before the development of modern banking, banks only kept basic records of their clients’ identities, including names, dates of birth, addresses, and bank account numbers. However, financial institutions have begun to gather more meaningful data about customer transactions due to the growth of digitalized banking. This involves using client spending data to identify potential credit concerns, putting risk management procedures in place, and using data gathered from customer surveys. Banks gather insights due to the rising use of artificial intelligence (AI), which must be efficiently managed, stored, and secured for the protection and security of personal data. Financial institutions must assess their storage needs and develop more scalable, efficient solutions to address their expanding data needs.
Since the late 1980s, corporations and financial institutions have relied heavily on flash storage, including solid-state drives (SSDs), for quick speed and short retrieval times. In comparison to conventional hard disk drives (HDDs), which are known in the industry to store and handle “cold” or “warm” data, SSDs can provide faster access to data (so-called “hot storage”).
Flash storage helps speed up data-intensive processes like processing customer transactions and real-time data analysis for UK banks. However, “cold” storage (HDDs) and “hot” storage (SSDs) both have significant roles to play in data management. For information banks that need instant access to, such as transactional data, “hot” storage is essential. On the other hand, “cold” storage is utilized to retain historical and inactive data. However, HDDs offer bigger capacity and are more cost-effective due to a cheaper price per terabyte and other total cost of ownership (TCO) factors.
HDDs give a different access speed for data retrieval. The amount of accessibility necessary is the main factor to take into account while dealing with archive data. Although it is possible to retrieve data from both data backups and archives, doing so via archives can take a few minutes to many hours. Depending on the data’s nature and volume, this may need manual searches.
Institutions are integrating data analytics and AI capabilities into their storage systems. In fact, according to one estimate, the market for AI-powered storage will be worth about $25 billion by the 2025 end. AI may be used to determine and optimize a bank’s data storage needs, separate the data into live and archival copies, and even automate the procedures and schedules for managing storage.
Digitalized banking generates a significant volume of data encompassing customer information, transaction records, financial statements, and market data. Robust storage systems, such as cloud-based platforms or data centres, are crucial in efficiently managing and storing this data.
These centralized storage solutions provide secure data storage, backup, and disaster recovery capabilities. Moreover, they enable easy and fast accessibility to data. This seamless access facilitates smooth operations and enhances customer service by allowing quick retrieval of relevant information.
Personalized customer experiences are at the core of digital banking. Banks can gain valuable insights into customer behaviour, preferences, and financial needs by leveraging stored data. This data is a foundation for creating tailored products and services, personalized marketing campaigns, and targeted recommendations. For instance, customer relationship management (CRM) systems store customer data, allowing bankers to offer customized solutions and deliver exceptional user experiences. These personalized interactions foster stronger customer relationships and satisfaction.
Efficient data storage is fundamental for advanced analytics and business intelligence in digitalized banking. Banks can leverage big platforms to store and analyze vast volumes of data. Banks derive valuable insights, identify patterns, detect fraud, and make data-driven decisions by applying analytics techniques. These analytics capabilities enable banks to understand market trends, manage risks, optimize operations, and improve profitability. Access to comprehensive and well-organized data fuels the success of these analytics initiatives.
The storage of sensitive financial data necessitates stringent regulatory compliance and robust security measures. Banks must comply with data protection regulations, ensuring data privacy, confidentiality, and integrity. Storage solutions with strong encryption, access controls, and audit trails safeguard customer data from unauthorized access or breaches. Implementing proper data storage practices allows banks to meet compliance requirements by securely storing transaction records, regulatory reports, and customer consent data. This focus on regulatory compliance and security instils trust and confidence among customers.
Digitalized banking demands storage solutions that can scale and adapt to accommodate the growing volume of data. Cloud-based storage solutions offer scalability, enabling banks to expand storage capacity as needed without investing heavily in physical infrastructure. The flexibility of cloud storage also facilitates seamless integration with other banking systems and applications, promoting efficient data sharing, collaboration, and innovation. This agility in storage solutions supports the dynamic nature of digital banking operations and ensures scalability as the business evolves.
In summary, efficient data storage empowers banks to manage vast amounts of data, ensures accessibility, enhances customer experiences, supports advanced analytics and business intelligence, facilitates regulatory compliance and security, and provides scalability and flexibility. Banks can optimize operations, deliver personalized services, and make data-driven decisions by effectively leveraging stored data, enabling them to thrive in the digital banking landscape.
Following the challenger banks
Online and offline banks are pressured to meet shifting standards for the best client experience. This calls for high-performing storage solutions to ensure a seamless experience and consumers’ quick access to their data and services.
Customers will benefit from the improved convenience of Internet banking in the future, but banks must ensure that the necessary infrastructure is in place. Banks must improve their storage options to stay competitive in a crowded industry. Massive volumes of live and archived data have resulted from the quick development of digital banking.
Banks may offer tailored consumer experiences by investing in scalable, secure storage solutions. Consumers will have faith in real-time transactions and data-driven insights, building strong trust with prospective and current clients. The foundation for advancing the industry will be effective storage solutions.
Digital transformation has significantly impacted the banking industry, and traditional banks must adapt to stay competitive in a market that values digital-first service. With the pandemic accelerating the shift to online banking, customers expect a seamless user experience and prioritize a bank’s online capabilities when making decisions.
Effective storage solutions are essential for maintaining efficient consumer access, customer trust, and reliability. With the emergence of neo-banks and the growing volume of data produced, financial institutions must prioritize storage solutions to maintain a competitive edge in the industry. Banks can provide tailored consumer experiences, build client trust, and advance the industry by investing in scalable, secure storage solutions.