Speed, the competitive advantage with flash storage

20 July, 2017
Levi Norman

The financial sector was one of the earliest adopters of flash storage. The explanation for this is simple: In the financial industry, speed is a competitive advantage.[1]

image of a digital earthEquities trading provides a good example. As traders began moving to automated systems, the speed of equities transactions increased until they were completing in milliseconds. Human traders couldn’t keep pace, which led to an emphasis on IT infrastructure – fast infrastructure, where a few milliseconds could translate into significant competitive advantage.[2]

You might think that random-access memory (RAM) was the answer, and it was, initially. RAM is very fast, but it’s also volatile. To reduce risk and to meet legal requirements such as SEC requirements for securities exchanges and member organizations (like your stockbroker) to capture and maintain a Consolidated Audit Trail (CAT) of every US transaction, equity trading applications needed to record every transaction to non-volatile media.

Flash is non-volatile, which means that when you turn off the power, data is not lost. And flash storage solutions such as IBM FlashSystem 900 can achieve responses times (latency) of under 100 microseconds.[3] Though this is slower than current DRAM latency, it’s still an order of magnitude faster than automated stock trades complete. A need, and a solution, were born.

Other evolutionary and competitive forces were at work in the financial industry as well. Banking systems, for example, began moving from pure systems of record to “systems of engagement” such as online and mobile applications.1 This new breed of customer quickly demonstrated a new level of impatience – no standing stoically in long lines for the online shopper. Applications must respond quickly, or customer dissatisfaction and even loss can result.

Few industries have been more affected by the revolution in online social engagement than the insurance industry.[4] Only a few years ago very few consumers purchased insurance products online. Today, the majority do. Insurance companies face many new business challenges, including multiple billing plans per state, mobile payments, PayPal transactions, and intense pricing competition, to name only a few. Online carriers are proliferating and they must offer customers the ability to make real-time policy changes and then see accurately updated rates and billing schedules immediately, or these internet-savvy users may quickly click to another carrier.

The risk and market assessment requirements of financial services enterprises have also fostered an industry-wide adoption of various data analytics tools. Learning where markets are trending and what risks lie ahead today is much more valuable than learning it next week, intensifying the advantages of very fast IT systems.

The financial sector is diverse, encompassing businesses ranging from traditional hometown banking, through investment and wealth management, to global securities exchanges. Though their business models and operational environments vary widely, most members of the financial services industry share something in common: the need for non-volatile, high performance data storage.

Flash fills the bill. It’s non-volatile. Current flash arrays such as IBM FlashSystem offer latency down in the microsecond range – an order of magnitude, or two, faster than conventional storage a few years ago. Flash burns less power and takes up less space than mechanical disk storage.

Click here to find out more about the storage technology embraced by the financial sector.

[1] IBM Thought Leadership White Paper: IBM FlashSystem storage speeds financial services, August 2014 (TSW03284-USEN-00)

[2] InfoWorld White Paper: Storage at the Speed of Wall Street, April 2014

[3] IBM FlashSystem 900 Specifications

[4] IBM Thought Leadership White Paper: IBM and CSC: Accelerating the insurance industry together, September 2015

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