Why Today’s Challenger Banks Need to Abandon the Traditional Approach to Data Recovery
TSB’s spate of outages over the past year caused damage that extended far beyond the IT team, affecting every part of the company and its wider reputation.
Over 80,000 of their customers sought greener pastures elsewhere, incurring costs for TSB in excess of £330m, and putting them towards their first-ever loss. While the losses they experienced were intense, IT failures like this one will likely continue to plague banks, especially since external threats posed by cybercriminals are at an all-time high. Research from security firm Carbon Black found that over two-thirds of financial firms have reported an increase in cyberattacks in the past 12 months, as cybercriminals increasingly chase after high-value targets that are rich in personally identifiable information.
Challenger banks, which are free from the baggage of residual legacy IT systems that traditional banks have, are also still impacted by outages. Monzo and Revolut both fell foul of high-profile IT failures in the past few months, with customers taking to Twitter and other social channels to amplify their displeasure with the situation. And while neither bank has fallen out of favour just yet, customers won’t tolerate these IT hiccups for long.
Consumers have become accustomed to a high standard of service due to their experiences across multiple industries, so today’s banks are now expected to provide the same 24/7, always-on access to data.
Consumers have become accustomed to a high standard of service due to their experiences across multiple industries, so today’s banks are now expected to provide the same 24/7, always-on access to data. This means they don’t take kindly to IT slip-ups that affect their ability to access their money or financial information. The stakes to stay online are higher than ever before.
Traditional data backup and disaster recovery is no longer enough, as even a minute-long outage is not acceptable. Further, UK customers are looking to challenger banks to provide an outstanding level of customer service and convenience not available from the banking old guard. But, how can challenger banks avoid making the same mistakes as their more established counterparts?
Why traditional recovery fails for untraditional finance
The problem with traditional recovery is that is no matter how it is implemented, there will always be delays of some kind during the process of data restore. Conventional disaster recovery is based on recovery point objectives (RPOs), a metric which quantifies how much data a business can afford to lose, and recovery time objectives (RTOs), which measures how long it will take to recover data. This approach is workable for industries that can afford minor delays in getting data and systems back up and running again. But in the ultra-competitive world of today’s banking industry, organisations have no such grace period, with any period of downtime likely to be fiercely punished. Research shows that nearly half of IT professionals feel they have less than an hour to recover business-critical data before it starts impacting revenue.
Challenger banks have a lot to lose by failing to ensure full, instantaneous data availability, particularly if their competitors manage to do so
What challenger banks should be looking for instead
Challenger banks who want craft reputations for the quality of service and reliability need to instead look towards solutions that can provide true ‘continuous availability,’ where there are no interruptions to usability because data and systems are being replicated in real-time. However, they also need to be incredibly careful that the solutions they are exploring represent true continuous availability and are not just being marketed as such. Many of these imposter solutions use ‘manual failover’, which is when the switchover isn’t triggered automatically and can increase delays and expenses. Many of these solutions are also very narrow in their focus and only protect one or two platforms. Organisations instead need to pursue solutions that can ensure availability for all types of data, whether that data resides in public and private clouds, on-premises or in virtualised environments. They should also search for technologies that use a journal-based approach, which replicates data in real-time at the byte level, as opposed to the traditional snapshot-based approach most commonly found in backup and disaster recovery solutions.
In the hyper-competitive world of modern UK banking, it’s vital that challenger banks are seen as nimble, agile and a reliable place to store consumers’ hard-earned money. This is a time of radical change for the industry, and many people are questioning their bank for the very first time. This means that challenger banks have a lot to lose by failing to ensure full, instantaneous data availability, particularly if their competitors manage to do so. If they want to positively differentiate themselves from the established competition, they would be best placed to explore solutions that allow them to sidestep the issue of recovery entirely. This will allow them to provide consumers with the constant access to their money, and their data, that they have now come to expect.