Financial firms are under constant pressure to reduce storage costs while complying with strict regulations and mitigating security risks. Here's how they're achieving this balance:
These strategies not only reduce expenses but also ensure compliance and security in a rapidly evolving industry.
With firms managing an average of 5,800 terabytes of data, finding a cost-efficient storage solution is critical. Tiered storage offers a way to cut costs by up to 70% while ensuring essential data remains easily accessible.
Tiered storage organizes data based on how often it's accessed and its importance. Typically, it’s divided into four main categories:
Interestingly, only 10% to 20% of data qualifies as "hot" at any given time. This means most data can be stored on lower-cost options without disrupting daily operations. Financial firms can allocate premium storage for critical tasks while shifting older records - like archived emails or historical transaction data - to more economical tiers.
Automated systems make tiered storage even more efficient. These systems monitor data usage and adjust storage tiers dynamically. For example, a customer file actively used during loan processing stays in hot storage but transitions to cold storage when it becomes inactive.
This approach not only optimizes costs but also minimizes risk. By reducing the volume of sensitive data stored in high-risk environments, firms can lower their exposure to potential cyberattacks by up to 80%.
Implementing automated data lifecycle policies requires more than just moving older files to cheaper storage. Data lifecycle management ensures that data flows smoothly from creation to deletion, helping financial institutions balance compliance with cost control.
Start with a comprehensive data audit to understand access patterns and determine the relevance of different data types. Collaborate with IT teams, compliance officers, and department leaders to establish clear categories and retention rules. Automated systems can then move files - whether from hot to warm storage or straight to archival - based on these predefined policies.
Stakeholder involvement is key. Without support from various teams, these policies might face resistance, limiting their effectiveness. It’s also essential to recognize that not all data is the same. Customer information, for instance, often requires more stringent handling than transactional or accounting data. While active account data may need immediate access, records from closed accounts can transition to archival storage over time.
Regularly reviewing and updating these policies ensures they remain aligned with changing regulations and business needs. Adjustments to retention periods, storage tiers, and security protocols help institutions stay compliant and efficient.
Training staff on the importance of data lifecycle management is equally important. Clear guidelines and consistent naming conventions simplify data organization and ensure smooth adoption across the organization.
Lastly, a robust backup system is non-negotiable. It ensures quick file retrieval from any storage tier, safeguarding against data loss while maintaining the cost benefits of tiered storage.
Financial institutions often find themselves overspending on unused storage. In fact, 82% of organizations face challenges with cloud costs, and 47% of cloud resources go to waste. On average, 82% of disk space remains underutilized, while 16% sits idle entirely. Automation offers a way to recover millions of dollars, all while maintaining performance and security.
Automation tools can continuously scan storage environments to uncover underused or idle resources. These systems monitor usage patterns, access frequency, and performance metrics to identify assets that drain budgets without delivering value. Financial firms can adopt similar strategies by focusing on three key areas: automated rightsizing, resource tagging, and policy enforcement.
Scheduling is another critical tactic. Many development and testing environments don’t require 24/7 operation but still consume resources as if they were production systems. By scheduling virtual machines (VMs) to shut down during non-business hours, organizations can significantly cut costs without disrupting operations.
Once idle resources are identified, AI takes automation to the next level by refining storage allocation through demand forecasting. Unlike basic automation, AI-powered systems predict future needs and adjust resources proactively. These tools analyze historical usage, seasonal trends, and business cycles to anticipate storage demands before they impact performance.
One standout application is autoscaling policies, which dynamically adjust storage capacity to match real-time demand. During peak periods, storage scales up, and as demand decreases, it scales down - avoiding both over-provisioning and performance issues. Machine learning can even detect subtle patterns, like recurring storage spikes at the end of each month, and allocate resources accordingly.
AI also enhances lifecycle policy enforcement. Instead of relying on simple, time-based rules, AI evaluates access patterns, user behavior, and business context to make smarter decisions about when to move data between storage tiers. In addition, AI simplifies compliance management by automatically ensuring sensitive data is stored appropriately while optimizing costs for less critical information. It can also generate audit trails and compliance reports without manual effort.
More financial firms are adopting hybrid and multi-cloud storage strategies to strike a balance between cutting costs and meeting strict regulatory requirements. According to Nutanix's third annual Enterprise Cloud Index research, hybrid cloud adoption in the financial sector is expected to grow by 39% over the next five years. This trend makes sense when you realize that up to 80% of enterprise data remains untouched for over a year. This creates an opportunity to strategically place data where it’s most cost-effective. By combining automated storage efficiency with these approaches, companies can significantly lower costs while staying compliant.
Hybrid storage offers a practical solution by allowing firms to store sensitive data on-premises while moving less critical data to affordable cloud storage. This setup ensures security and compliance while optimizing storage costs.
"The hybrid cloud offers consumers the best of both worlds by combining the public cloud's flexibility and scalability with the private cloud's security and control." - Nutanix Enterprise Cloud Index
One of the biggest advantages is the ability to classify data intelligently. Financial firms can sort their data into categories like sensitive or non-sensitive, hot or cold, and identify redundant, obsolete, or trivial (ROT) data. For example, sensitive customer information and regulatory documents can remain in private clouds or on-site, while cold data - data that’s rarely accessed - can be moved to public cloud storage, which is far more cost-effective.
Investing in cloud data management has proven benefits, including cutting operational costs by 25% and speeding up time-to-market by 30%. Hybrid cloud solutions also reduce the need for large, company-owned data centers and a big in-house IT team, further lowering expenses.
To maximize these benefits, financial firms should analyze each workload individually to determine the best location for hosting while ensuring compliance. Transitioning from hybrid to multi-cloud strategies can unlock even more opportunities for cost savings and efficiency.
Once a hybrid system is in place, multi-cloud strategies take cost management to the next level. By using multiple cloud providers, organizations can choose the best features from each, optimizing costs and performance. On average, companies manage over eight cloud environments at once. A fully scaled hybrid multi-cloud platform can deliver two-and-a-half times the value compared to sticking with a single platform or vendor.
However, success with multi-cloud requires careful planning. Firms need to set clear goals that align with their broader strategies and choose cloud providers based on their specific strengths and services. A centralized cloud management platform is crucial for maintaining visibility across the organization and keeping costs under control.
FinOps practices make real-time decisions about resource allocation and spending possible. Tools like AWS Cost Explorer and Azure Cost Management help track underutilized resources and identify opportunities to rightsize.
Another major benefit of multi-cloud is avoiding vendor lock-in. By spreading resources across multiple platforms, firms can maintain compliance while reducing unnecessary expenses. Automated resource allocation and open standards also make it easier to adjust as needs evolve.
To ensure flexibility and avoid costly migrations, financial firms should design systems with portability in mind. This includes using infrastructure-as-code and open standards to assign workloads to the most efficient hosting locations. With these strategies, companies can maintain control over costs while staying agile in a competitive market.
For financial firms, the challenge of cutting storage costs while maintaining top-tier compliance and security is a balancing act. The stakes are high - data breaches cost these firms an average of $4–5 million per incident. Adding to the concern, 75% of financial institutions reported at least one ransomware attack in the past year.
The regulatory environment only heightens the complexity. In April 2023, the Irish Data Protection Commission fined Meta $1.3 billion for transferring data of EU-based individuals to servers in the United States. This case highlights how non-compliance can escalate costs dramatically. In fact, 36% of UK firms faced penalties for non-compliance in 2023. To address these risks, nearly half of financial institutions plan to increase their compliance technology budgets by 2025. These investments are driving the adoption of robust data encryption and secure file-sharing protocols to mitigate risks.
Encryption and secure file sharing are essential pillars of compliance and data security. With projections showing that over 50% of global data will be stored in the cloud by 2025, financial firms need strong safeguards as they migrate to cost-efficient cloud storage solutions.
Key strategies include implementing multi-factor authentication (MFA), AES encryption, and Zero Trust models to protect sensitive information. Managed File Transfer (MFT) platforms play a crucial role by integrating these security measures. They help firms meet regulatory requirements such as HIPAA, GDPR, PCI DSS, and GLBA by providing features like end-to-end encryption, authentication, granular access controls, and audit logs to secure data during transfers.
The 3-2-1 backup rule remains a cornerstone of secure data management - maintaining three copies of data across two different media types, with one copy stored off-site. Additionally, data loss prevention (DLP) strategies are critical, especially since 43% of cyberattacks target small and medium-sized businesses, yet only 14% are adequately prepared to handle them. These measures are vital for platforms like Debexpert, which facilitate secure financial transactions.
Debexpert provides a real-world example of how secure file-sharing solutions can optimize costs while maintaining high security standards. The platform ensures sensitive financial documents remain protected throughout debt trading processes by utilizing end-to-end encryption.
Debexpert enables banks, lenders, and institutional buyers to exchange debt portfolio information securely. Its real-time communication features protect sensitive data during buyer-seller interactions, demonstrating how Virtual Data Rooms (VDRs) offer a safer alternative to consumer-grade platforms like Box and Dropbox.
For firms engaged in debt trading, Debexpert’s portfolio analytics and auction setup tools illustrate how strict access controls and advanced analytics support both compliance and decision-making. The platform also performs compliance verification for all participants, ensuring that both sellers and buyers meet regulatory standards before accessing sensitive financial data. This approach minimizes the risk of penalties and enhances trust in the trading process.
Financial firms face the dual challenge of cutting storage costs while adhering to strict compliance and security standards. The strategies outlined here provide a clear path to achieving these goals without sacrificing operational efficiency.
To manage storage effectively, firms should combine tiered storage with automation. By organizing data into tiers - high, mid, and low-frequency access - costs can be reduced while maintaining system responsiveness. Adding automated lifecycle policies ensures data moves between tiers based on actual usage, optimizing both performance and spending.
Another key step is to analyze query logs regularly and use AI tools to fine-tune queries, which can lead to noticeable cost savings.
Adopting hybrid and multi-cloud models is another smart move. These models provide secure and cost-efficient data management options. Data management expert Alexey Utkin highlights the importance of using data strategically to balance costs and performance.
Additionally, firms can use hardware accelerators and refine software licensing strategies to further trim expenses.
These methods lay the groundwork for immediate improvements in storage management.
To build on these optimization strategies, financial firms can take several specific actions to enhance efficiency:
These steps not only enhance cost efficiency but also help firms stay agile in a rapidly evolving financial landscape.
Financial firms can ensure compliance by establishing a solid data management framework that aligns with regulations like GDPR, CCPA, and GLBA. This involves creating well-defined policies and guidelines, enforcing robust security measures such as encryption and access controls, and performing regular audits to safeguard data at every stage of its lifecycle.
Keeping up with regulatory updates is also crucial. Firms need to stay informed about changes in laws and adjust their policies accordingly to maintain compliance. Using tools and processes designed to simplify compliance efforts can help ensure that data management practices meet both legal and security requirements.
When shifting from a hybrid to a multi-cloud storage strategy, financial firms need to focus on flexibility and scalability to effectively manage workloads across various cloud providers. This strategy helps mitigate concentration risk, reducing the chances of service disruptions.
Equally important are security and regulatory compliance. Firms must establish strong security measures to safeguard sensitive data while ensuring their systems meet industry standards and local regulatory requirements. Tackling these priorities allows financial institutions to manage costs efficiently while maintaining compliance and operational stability.
Automation and AI are transforming the way financial firms manage data, offering a practical solution to reduce storage costs. By streamlining data management, these technologies optimize storage efficiency - cutting down on redundancy, ensuring only relevant data is retained, and improving how information is stored and accessed. Predictive analytics and the automation of routine tasks further enhance these efficiencies.
That said, adopting automation and AI isn’t without its hurdles. Financial firms must navigate strict regulatory requirements and establish strong data governance policies. Integrating these advanced systems into existing infrastructures can also be quite complex. On top of that, firms need to address potential risks, such as cyberattacks and system vulnerabilities, to safeguard their operations and maintain reliability.