Future of financial services is built on unstructured data

Unlocking the value of unstructured data is the key to the future of financial services. While banks, financial institutions and other capital markets participants continue to innovate to meet the challenges of digital transformation, many fail to utilize the intelligence within the unstructured data that exists across their organizations.

Unstructured data promises to yield insight into changing customer needs, allowing firms to stay ahead of future trends, and most importantly stay ahead of the competition. However, the domains of structured and unstructured data have largely remained separate with automated processes primarily focused on structured database files that have defined fields, data types, and parameters. It is easy to assign, request and restrict access to these types of data, because it is fairly straightforward to apply traditional keyword-based search and analysis methodologies.

Unstructured data is more complicated, having a much wider range of sources such as records from call center interactions and CRM systems, earnings transcripts, financial filings, email exchanges, survey responses and even PowerPoint presentations to consider. The ambiguities of these unstructured files make them more difficult to handle than data held in a database format. As a result, vast stored repositories of unstructured data, sometimes called Dark Data, sit dormant because firms lack the tools to harvest their full potential.

In an intensively data-driven industry like financial services, management and analysis of these large quantities of data is essential to success in a digitized world. Enhanced customer insight and engagement, and development of new services through digitization of financial products, are well understood as central to keeping pace with traditional institutions, but also leaner digital-first disruptors, like Monzo and Revolut.

Consequently, financial institutions are considering how they can meld existing workflows and network infrastructure with digital analytics to achieve the benefits of better, more contextual decision making.

Formerly convervative institutions, banks and financial services are now having a tough time blending legacy technologies with newer innovative technologies. New platforms and systems require massive capital expenditures, with commensurate planning and time for technology integration, migration and rollout. In fact, these organizations are often tied to legacy infrastructure by way of regulatory mandates, as well as the limits and complexity of existing installed software and hardware.

Data protection enables digital transformation

Data security is arguably among the top determinants for both current systems and new technology acquisition. Unstructured data accessed on file servers and Network Attached Storage (NAS) devices pose a huge security risk.

While data breaches, and subsequent criminal abuse of highly sensitive information, are a paramount concern, the rising tide of ransomware cyber-extortion exploits are particularly alarming as criminals look to encrypt entire networks and hold lifeblood data hostage for millions of dollars.

Most financial firms and banking institutions rely on prevention technologies, such as perimeter and endpoint security systems, to help solve this problem although they would almost universally agree that there is no truly impenetrable defense. These organizations are only as strong as their weakest link which is often a single credentialed employee innocently victimized by a phishing or whaling scheme.

This has led to a struggle between digital transformation, and the technical and business challenges of change. However, the enterprise has in many cases already adopted technologies that can be seamlessly utilized to achieve digitization goals. File sharing systems, the most advanced of which provide unstructured data management capabilities, can in fact make it easier and more economical to securely—and compliantly—store and work with data assets at speed and scale.

Some of these solutions have next-level cloud-native capabilities, increasingly augmented by AI and machine learning, that can be optimized to elevate secure data collaboration and decision-making among cross-functional and distributed teams. The speed and accuracy at which this can be achieved is unprecedented, and built-in data security offers clear business benefits for capital market players.

Extending the value of storage 

Many banks and financial services firms currently use cloud-based file sharing technologies, often referred to as global file systems or NAS storage replacement, for unstructured data collaboration and management. Vendors in this genre typically partner with hyperscalers for cloud storage, and some work closely with managed-services organizations to deliver discreet, fit-for-purpose solutions. The objective is to provide faster and more efficient handling of massive volumes of unstructured files, which must be stored and retrieved in compliance with the higher control and regulatory requirements of the financial industry.

These systems also allow organizations to migrate or re-platform data, workloads and applications to the cloud, and to consolidate data across any combination of on-premises and cloud storage, without refreshing existing infrastructure. 

Banks and financial markets firms can use NAS replacement systems to move applications and data as-is to a public cloud, while enhancing or replacing some components to take advantage of the growing plethora of cloud services, without rewrite or workflow changes. In the case of Panzura, for example, the file system has been engineered to make additional backup unnecessary.

Reducing the incumbent technical complexity of the environment, as well as reducing the cost of data management, is a primary objective. Overall, effective services have documented reductions in the related data-storage footprint of around 70 percent, allowing organizations to use their infrastructure investment dollars more effectively.

The most progressive global file systems have also evolved to offer a built-in SaaS-based data analytics layer, allowing financial services to apply cloud-based AI and ML analysis to data held in the system itself. This helps accomplish two objectives, first, to build monitoring, continuous system-wide health checks and self-healing capabilities into the system to promote an improved customer experience.  

Support for data intelligence platforms like Splunk for monitoring, searching, analyzing and visualizing machine-generated data in real time are part of the total cost of ownership calculation that banks consider with these solutions. Another key consideration is support for containers like Docker which allow applications to be moved quickly and enable developers to replicate running environments.

These types of integrations mean organizations can derive insight from their unstructured data—including vastly underutilized Dark Data—as well as accelerate the launch of new digital banking and investment products, and create more personalized financial services and insurance opportunities, to serve their customers better.

Immutability is key to data security

Financial services firms and banks can also tap their global file system, depending on the built-in and often automated capabilities of the platform, to handle data protection, backup and disaster recovery. Those that have achieved FIPS 140-2 certification, for instance, provide management for the highest levels of security and control.

Organizations can protect data from ransomware and other malware variants with embedded security, recovery and compliance from the start with platforms that employ immutable data defenses. In case of an attack, with an immutable system architecture, there is typically no need to pay a ransom. The result of an attack is little downtime, and minimal disruption because files are fully and quickly recoverable with no or very minimal data loss.

Data immutability is increasingly understood among financial services and banks to mean data itself, held in a file system, is fundamentally resistant to attack, reducing the impact and spread of malicious payloads. This type of file system architecture has been defined by Panzura and successfully iterated by cloud providers like AWS S3. It has been mimicked to lesser effect by other vendors such as data governance and observability services, and even unified NAS replacement file services.

Immutability preserves a single authoritative data set with one security policy, which cannot be changed, edited, or overwritten. If an attack does occur, files held in some of these systems—more precisely held in virtual appliances at the edge called “filers”—can be reverted to a granular restoration point, conceivably in just seconds. This can be done for a single file, entire directories, or even the entire global file system.

This data storage methodology has the added advantage of protecting data from accidental deletion or overwriting, and even structured database files can be archived by the filers to imbue them with the same immutable protection and resilience.

A cardinal attribute in some systems is secure-erase capabilities for a high level of data destruction which is equivalent to destroying the actual disk. In these scenarios, organizations can delete all traces of legal records stored in the cloud in compliance with guidelines for media sanitization as set out in the Special Publication 800-88 of the National Institute of Standards and Technology (NIST).

Unstructured need not mean underutilized

The appeal and added value for banks and financial services firms that comes from the most advanced global file technologies is understandable. Organizations are not hostage to their existing infrastructure, nor are they limited by webs of regulation, or the extraordinary costs and risks of refreshing legacy systems.

Global file systems, immutably architected for security and control, can be adapted and deployed to quickly and significantly improve access, management and analysis of unstructured data. Coupled with natively integrated data services, these systems are in fact designed for industries where millions of data points are created every second.

The banking and financial services sector is driven by an immense and growing ocean of unstructured data. These firms are poised to leverage the extraordinary knowledge and expertise already residing inside their organizations, to deliver both near- and long-term business value. Secure, immutable file system technologies offer a unique duality of addressing important business challenges around the cost of operations and security, while also bolstering business velocity and revenues.