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August 4, 2015

How Banks Chop Big Data Down To Size

Posted by Dennis Gada (View Profile | View All Posts) at 7:43 AM

Investment banks need big data to thrive [Source: https://www.youtube.com/watch?v=fF8wHSrWQBI]

Your enterprise doesn't have to be intimidated by Big Data if you know how to chop it down to size. Then that data becomes all the more manageable and potent to revving up your business processes. That's just one of several insights that chief information officers often share with me whenever we chat about optimizing their organizations.

One of the key challenges for all banks - no matter at what stage of their IT journey - is how to deal with the promise of Big Data against a backdrop of enormous and often ungainly legacy mainframes that your company might have a difficult time retiring. Part of the issue for large corporations is real estate. Mainframe computers take up enormous amounts of space both off-site and in expensive corporate offices. It's difficult to convince a CEO to dismantle decades-worth of computer hardware because of the promises inherent in the Cloud. Still, it's worth being proactive in convincing your organization to become more nimble and embrace modern technological infrastructure.

Many companies, especially large financial services institutions that (over the decades) have built in-house mainframes, are struggling to reconcile their legacy systems with the ability to efficiently and quickly parse Big Data on various types of Cloud. Some organizations are still working with the traditional ETL model - extract, transform, load - that is a half-century old and completely obsolete. If your organization is looking to succeed in the realm of data analytics and data discovery, using the traditional ETL method can be a nightmare.

The culture of data storage - even at banks - is changing such that in 20 years all enterprises will see storage as a commodity. Big Data might be big, but it's becoming simpler to enterprises that leverage the appropriate technology to use it to their advantage. Given all the new options at their disposal, organizations are becoming tired of the decades-old practice of 'racking and stacking' their technology infrastructure.

I have a colleague who likens the current Cloud storage facilities to gated communities. That is, there are always outside threats from entities that want to get in and steal (in the case of corporations) information. But that's why communities become gated in the first place and then continue to improve their security measures to stay several steps ahead of data thieves.

The act of data consolidation yields a huge amount of savings and cost is a huge driver. In the old days, every enterprise wanted its own warehouse with a unique infrastructure. They wanted things that nobody else had. Of course, such is still the case with leading banks that build on their own legacy systems. But given the tremendous costs these days of maintaining legacy mainframes, many companies are considering the Cloud as a way of boosting their return on equity.

For smaller firms, all the controls are already there. You can buy just about any infrastructure service - and that includes modernizing what you already have in-house. For smaller organizations - and, indeed, vastly larger ones like various agencies of the United States government - Amazon.com offers economical storage space without alerting your organization to others that are sharing that particular Cloud with you.

The hurdle for most enterprises is telling your bank's most prominent stakeholders that sensitive company data is going to be secure on the Cloud. That everything is private and you're not sharing anything with anyone. Indeed, financial firms want to know which virtual rack they are on as well as who might be next to them. Why the obsession with location, location, location? Well, security and data protection remain the top concern of boards of directors and CEOs, the latter of which are bound to lose their jobs over large data leaks. An enterprise must assure its directors that it can encrypt everything that's on the Cloud. Even if the enterprise decides to leave one particular vendor - or even if the Cloud vendor goes out of business.

Then there's the issue of legacy integration. For the largest enterprises, you can't just say that you are going to do everything on the Cloud without looking back to what some like to call the 'the mothership.' If a large enterprise has a number of global data centers, everything changes when you go on the Cloud. Banks must make their Cloud transitions with regulation and compliance in mind.

Not every company has a CIO who is charged by a hard-driving CEO to change the technology infrastructure overnight. In the banking sector, in particular, institutions have been slow to adopt any kind of warehousing situation that is outside their four walls. Banks typically build their own vast, in-house systems, partly because of the prestige and partly because they can afford to do so. The culture of technology at most large banks is that everything is best left internal, especially given changing regulations and industry requirements. But, I think, all of that is about to change.

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