THE fast-changing dynamics of the financial services sector has the power to make or break the economy. The Asia-Pacific financial services industry is a fast evolving sector that has contributed to the steady growth of the region's economy over the past two decades.

Technology needs of financial institutions have also grown significantly and this is reflected in the trend of positive IT spending among banks in the region.

Increasingly, the spotlight is on the customer and major technology-led initiatives are measured against how banks are better able to serve the customer.

One of the major technology issues that CIOs (chief information officers) constantly grapple with is the proliferation of data and the growing reliance on technology to control and better manage their systems. Here are some of the key challenges worrying CIOs.

Managing IT with a business angle: Whilst aligning information technology with business has been the mantra of IT organisations for many years, in reality many bank networks are mired in redundant data, storage systems and a proliferation of monolithic architecture and infrastructure.

The challenge then is to eliminate redundancies while ensuring cost-effectiveness of the solution and improving business productivity.

For example, increasingly, storage solutions are measured against the positive impact on the bottom line. Storage technology that allows banks to stay 'always on' also has to be aligned closely with business objectives.

Business continuity: In banking, time is money. Nowhere are the negative repercussions of downtime more evident than in this industry. Downtime results in billions of dollars of lost income. The onus is on banks to operate on a 24/7 basis with 100 per cent data availability to keep business-critical functions operating.

As a result, business continuity (BC) and disaster recovery (DR) have become an integral part of the business and IT lexicon - and an increasing portion of the IT budget for financial services institutions.

CIOs of financial institutions have recognised that the repercussions of downtime go beyond the costs of idle employees and lost revenue - there is the greater and larger damage of loss to reputation and customer sentiment to deal with.

Regulatory compliance: In Asia, despite the clean-up after the financial crisis of 1997, issues of security and fraud continue to plague the region. Adherence to compliance measures such as Basel II and accounting standards are focus areas for banks.

From a data perspective, this has led to two major challenges for CIOs. First, meeting regulatory compliance standards has resulted in huge amounts of data that has to be managed over a period of time.

The second is in the interpretation of the new mandates. For CIOs, both the issues equate to higher costs and security headaches especially in light of the fact that exposure to fines and penalties has also increased.

Storage solutions that simplify the process of retaining data over a period of time, as well as increase efficiency of data management, are immensely beneficial to financial services companies.

While each is a formidable problem on its own, a combination is even more worse. However, there's a light at the end of the tunnel. A number of solutions are available in the market to help financial sector companies. Here's some of them:

Better storage and business goal alignment: A business plan that links IT objectives to corresponding business plans is critical to ensure technology investments support overall business goals.

It's no secret that organisations that align business with technology make better profit margins than their industry rivals. In response to the challenge of aligning IT goals with business objectives, progressive technology organisations are offering a services-oriented approach to managing core IT functions to its BFSI (banking, financial services and insurance) customers.

This approach assists financial organisations to decrease the pain points associated with storage management. Instead of the traditional piecemeal, task-oriented approach that leads to needless redundancies, over-subscription of storage, management complexity, a process-oriented, services approach to storage is a newer way of enabling the maximum optimisation of storage infrastructure that reduces cost and complexity - two key CIO data- management challenges in the financial services industry.

Better compliance management: The role of technology is to create comprehensive tools to meet the business reality of adherence to regulatory compliance. This is crucial as more and more records are created, distributed, and stored digitally.

Archiving mission-critical data has assumed utmost importance. The role of archival solutions is two-fold: it must preserve records unchanged, and it must make those records easily accessible.

The ideal solution provides a reasonable level of performance at an optimal cost. It does not demand a unique approach to configuration or management, but instead meets industry standards and supports common storage networking and management tools. It also ensures that records can be accessed and retrieved in time and integrates with other tiers of storage present in the company.

Better business continuity: Safeguarding data is the first step to keep a financial services organisation operating non-stop. More than just planning for disaster recovery, it's about building a resilient enterprise.

The solution might be as simple as local back-up, or as complex as replicating data over long distances. Storage technologies like Virtual Tape Library Solutions enable CIOs to obtain all the benefits of backing up data to disk. Coupled with new technologies such as de-duplication, CIOs of financial services organisations can eliminate redundant data-management leading to better business continuity.

In conclusion, given the rapidly changing financial services landscape, technology will play a vital role in further building and growing the industry and strengthening relationships with its customers.

Optimum storage technology can help CIOs address many of their key challenges and help them get a good night's sleep, as they rightly deserve.

The writer is Asean general manager, Hitachi Data Systems

This article was first published in The Business Times on January 1, 2009.