In the last decade, technology has significantly changed the way financial institutions operate. Where once money had to be physically exchanged for goods and services, it can now be traded virtually via card payments and over the internet using computers, tablets, and mobile devices.
The volume of digital transactions both online and in store has grown exponentially, with the number of digital payments actually overtaking cash payments in 2014, according to a recent report from the UK Payments Council. In addition, the rise of mobile technology has allowed financial institutions to offer their customers almost unlimited flexibility in accessing their money and carrying out transactions. However, despite the increasing complexity and functionality of computing and storage solutions, many financial businesses have not taken steps to update their infrastructure in line with the latest technology.
Investment is key
These modern systems, capable of faster, more efficient processing, are fast becoming an extremely valuable weapon in the battle to survive in the global financial marketplace. The risks of not modernising operational infrastructure are extremely high and have been well documented in both the private and public domains. The Royal Bank of Scotland provides a particularly strong testament to the consequences of under-investment in IT systems, having suffered major disruptions to its services multiple times in the last few years.
As new technology continues to evolve, many of the traditional heavyweights are finding themselves threatened by challenger banks whose modern systems provide them greater operational agility and reliability. This means that established financial institutions will soon be forced to invest in advanced technology and rapidly integrate modern solutions into their infrastructure, if they wish to avoid losing out to smaller, more innovative financial entities.
Cloud computing: the answer?
One of the biggest change drivers in the industry is the adoption of cloud computing and virtual environments. With the costs associated with maintaining and replacing legacy systems and desktop installations, virtualised desktop environments allow companies to cut investment in individual workstations for their workforce, whilst simultaneously reducing the resources invested in maintaining in-house equipment.
Security is also improved as the central hub can be protected by strict protocols and monitored at all times by a dedicated team of IT professionals. However, there is still a considerable challenge, particularly for large enterprises such as financial organisations that generate considerable traffic due to a constant stream of customer and corporate transactions. Where speed is of the utmost necessity, banks, trader organisations, and investment companies rely heavily upon rapid data processing in both their computer environment as well as their storage environment, to be able to compete in the financial market.
As transactional demand has increased and technology has evolved, legacy systems using magnetic disk drives have demonstrated their inability to cope with such high levels of activity. Therefore in order to support a fast and efficient virtual network, many companies are now turning to flash storage devices.
The benefits of flash storage
Flash storage arrays are not affected by the same physical limitations that apply to magnetic disk drives and have much lower latency periods, effectively making data retrieval instantaneous. Even when accessed by a large numbers of users, a central flash storage system can complete operations at five to 10 times the speed of a traditional magnetic storage array.
This has significant implications, particularly for banks and stock-traders, who consistently rely upon the ability of their systems to rapidly model trends and market behaviours in order to gain an advantage over competitors. With faster read times on huge databases, flash storage can rapidly deliver valuable information to traders, allowing them to make critical decisions before their competitors have a chance to react. Despite its potential within finance and indeed the wider business community, flash technology has often been overlooked due to the cost of implementation.
Per gigabyte, flash storage is significantly more expensive than magnetic storage and as a result, many institutions have historically avoided investing in flash enhanced storage. However, this trend is set to change, as the price of flash memory has been decreasing year on year, making it a much more attractive alternative to magnetic storage media. For those who cannot afford to implement complete flash storage solutions, there is a viable alternative.
A hybrid solution
Hybrid storage solutions take advantage of both the superior speed and performance of flash memory to run business-critical processes whilst leveraging the economy of bulk magnetic hard drive memory to store non-essential data. This is an extremely cost-effective solution, allowing companies to capitalise on the considerable benefits of flash storage without breaking the bank, so to speak.
In addition, hybrid storage has the advantage that it can be effectively scaled to suit the needs of any organisation, perfectly balancing affordability with enhanced processing capability, to deliver measurable ROI throughout its entire lifecycle. Business and finance have changed remarkably over the last half century and as technology continues to rapidly advance, the marketplace will become even more focused on speed and efficiency to reduce costs and maximise profits.
Financial institutions will be forced to maintain modern technology and infrastructure in order to compete in the global marketplace and to provide optimal services for their clients and customers. Whether it’s a retail bank or an investment company, finding scalable solutions that offer enhanced processing capability will be key in ensuring their continued profitability and survival in the turbulent world of global finance.
Paul Silver, Vice President EMEA, Tegile
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