The Flash storage market is growing rapidly, but is the financial services industry getting the most out of it?
In the enterprise storage world, all the talk is of flash solid state storage (SSD). Having already revolutionised consumer devices its impact is being felt in the world of business. Financial services, and insurance, in particular, stand to benefit immensely, but adoption is slower than it could be.
The rise of flash
For decades HDD has reigned supreme, but there are signs that it’s in decline. Wikibon found that in 2012 the number of flash units shipped was 1,000 times less than magnetic drives. By 2018 it is expected to reach parity and by 2026 flash will be 1,000 times more popular than HDD. As flash becomes more sophisticated and cheaper to run the barriers to adoption are falling away one by one.
The needs of business are growing. The age of big data is upon us, which means businesses need to up their game when it comes to analytics. Today, companies can draw on huge reserves of data to improve customer service, business operations and performance. Financial institutions also face a range of new regulatory requirements (such as the GDPR) which require a more accurate real-time view of financial information and risk assessments.
Insurance companies, for example, use data to help with their risk assessment policies and provide products which are more affordable and tailored to the specific needs of the customer.
Flash can play a crucial role. It offers a dramatic increase in performance which enables greater agility and superior customer experience. Storage density is much higher which leads to a smaller storage footprint and a lower total cost of ownership. Businesses need less power, cooling and floor space. The solid state construction is also much more durable. With no moving parts, it will last longer, perform better and require less maintenance. A well-built flash array could be good for seven to 10 years.
However, there are signs that financial services – and the insurance business in particular – have been slow to catch on. Research from Business Consultancy Bearing Pont suggests 90% of insurance companies are yet to adopt a company-wide data strategy despite being highly reliant on accurate data. Around two thirds of the companies surveyed by the research said big data had an important role to play in their organisation and 71% said big data would be a big priority by 2018. However, less than a quarter said their organisation had a company-wide strategy to make it work. A skills gap is a major obstacle according to just over half of respondents. IT departments are left to their own devices to focus on big data and only just over 30% of businesses said they felt they were ready.
This could be a missed opportunity for the industry where big data could be increasingly important. Already the finance industry collects a huge amount of information, and is collecting even more. Insurance firms, for example, can harvest information about driving style from telematics devices which can help them better calculate risk and premium levels; they can use CCTV footage and social media posts to draw up more complete and individual profiles. What flash storage does is increase the amount of data they can use, but more importantly make it accessible and usable.
Those which manage to do so will hold a crucial competitive advantage over their competition. They will be able to draw up more comprehensive risk profiles of existing and potential customers, allowing them to offer more competitive premiums and more tailored policies.
Other financial services firms will be able to access more up to date information on both the market and their company. For example, a firm can drill down into the fine detail of financial reports to see where the company is performing well and where it is not. A manager can get more details about which products and services are performing well and where true profit lies. They will be able to spot real-time performance identify any potential threats and fine tune their business accordingly.
A note of caution
Of course, there are problems with flash, particularly in managing the transition from legacy technology. Disk storage will also continue to play a role mostly in archived data which will not need to be accessed regularly. Equally, although the price gap has narrowed SSDs are still more expensive than HDD. Manufacturers of flash storage will argue savings come elsewhere, through a lower footprint, longer lifespan and reduced maintenance – together with superior performance. Even so, managers will need to see a clear return on investment in order to make the jump. Even so, the potential is enormous which is why so many companies are making the move to flash.
Want to explore the potential of flash for your insurance organisation?
Nimble Storage specialises in all-flash solutions, with predictive analytics, for major insurance companies. Schedule a discussion with a senior consultant and find out more: