Understanding How Data Centers Power the Financial Sector

By: Blair Felter on July 21, 2020

The global economy has undergone a profound digital transformation in the 21st century. Although the financial sector was among the first industries to embrace the computing revolution, the rapid pace of innovation has forced organizations to continually reinvent themselves to take advantage of the opportunities presented by new technology.

While data centers can hardly be considered a “new” development, they bear little resemblance to the on-premises mainframes that many financial companies once used to power their infrastructure. Increasingly, the financial sector is abandoning its outdated legacy systems and migrating their network systems to a new generation of data centers that provide far more than their predecessors in terms of flexibility, power, and reliability.

4 Reasons Why Data Centers Are Essential in the Financial Sector

1. Growing Storage Demands

At the beginning of 2020, the total amount of digital data in existence was estimated to be about 44 zettabytes in size; by 2025, approximately 463 exabytes will be created every 24 hours. To provide some context, a zettabyte is 1,000 bytes to the seventh power:

1 zettabyte = 1,000,000,000,000,000,000,000 bytes

Financial data makes up a sizable portion of this total as financial institutions are both generating and gathering massive amounts of data every day. Much of this data is coming from the increased use of online financial services. For instance, more than three-quarters of Americans used a mobile device to check their bank balance in 2019 and the total value of payments made with mobile devices is expected to exceed $500 billion in 2020.

Data centers provide an ideal storage solution for the unstructured data financial service organizations are gathering every day. The combination of innovative storage hardware and access to scalable cloud storage makes it possible for them to collect and manage the information that’s vital to making better business decisions.

2. The Power of Financial Analytics

Of course, gathering and storing all of that financial data won’t do a company much good if they don’t have a way to analyze it. Sophisticated analytics platforms driven by artificial intelligence and machine learning can sort through huge quantities of unstructured data to identify trends and draw insights that would otherwise escape notice. This information allows companies to make better decisions that are informed by actual data rather than relying upon instinct or intuition.

While today’s analytics tools are incredibly powerful, they are also quite resource-intensive. In most cases, they require high-density server deployments capable of providing the processing muscle to handle such high volumes of data. If those servers are deployed in an inefficient environment, they could significantly increase power and cooling costs. Colocation data centers not only properly optimized for today’s powerful servers, but they also provide direct cloud on-ramps that allow customers to scale their processing needs quickly and take advantage of powerful analytics tools without having to radically rethink their infrastructure.

3. Location, Location, Location

Speed is often a critical factor in the financial services industry. This is especially true for any company that’s involved in fast-moving financial markets or high-frequency trading. Latency arbitrage, which occurs when a firm exploits a latency-induced speed advantage to buy assets out from under a competitor split seconds before their purchases are finalized, has driven more and more companies to locate their data solution as close to the servers hosting financial markets as possible.

The threat of natural disasters, such as flooding or hurricanes, has also caused many financial services companies to turn to data centers for disaster recovery and risk mitigation solutions. While every industry is concerned about the threat of downtime, losing access to data at a critical moment can be devastating for organizations working in the financial sector. Colocation data centers can provide geographically diverse backup sites to ensure consistent levels of uptime availability.

4. Security and Compliance

Few industries are as heavily regulated as financial services. Failure to comply with legal requirements can result in costly fines, as well as expose an organization to the increased risk of a data breach. Whether it’s protecting personally identifiable customer information, keeping transaction data secure, or safeguarding proprietary applications, data centers offer a broad range of assurances for financial organizations seeking to mitigate risk.

It starts with meeting critical compliance standards like ISO/IEC 27001:2013 and PCI DSS 3.2.1, which create a foundation of security that companies can build their own services upon without having to worry about whether their infrastructure is exposing them to risk. Data centers also offer a high level of physical security to manage access to sensitive equipment, data, and applications. For many financial organizations, this security is critical to maintaining trust and winning additional business from customers.

Why Financial Services Companies Need a Secure, Reliable Data Center

Opportunity comes and goes quickly in today’s financial markets. That’s why financial services companies need to be poised to capitalize on opportunities when they present themselves. They need technology they can count on when they need it most. Aging, unreliable infrastructure, subpar colocation services, and inconsistent cloud platforms can contribute to system downtime, leaving an organization unable to access its essential data and applications when it needs them most.

Today’s customers have too many options available when it comes to financial products and services for companies to take their brand reputation for granted. Unreliable, inconsistent services will struggle to keep customers and find opportunities to grow. By migrating their IT systems to a colocation data center that delivers low-latency connectivity and high uptime reliability, financial companies will have the solid footing they need to build the network services their customers expect from them.

With colocation data centers positioned in key growth markets around the US, vXchnge delivers the “always-on” infrastructure that’s so essential to success in the financial sector. We combine a highly-secure and compliant data environment with world-class carrier-neutral connectivity that allows companies to connect their servers to leading cloud providers for maximum flexibility. And thanks to our in\site intelligent monitoring technology, our customers can also maintain unmatched visibility and control over their assets to ensure they’re operating at peak efficiency.

To learn more about how vXchnge data centers are helping to transform infrastructure for the financial sector, talk to one of our colocation experts today.

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