The Importance of Data Replication in Banking

Withdrawing money from an ATM is an easy enough process that we don’t think too much about what’s going on behind the scenes. As long as we get our money and the corresponding amount is deducted from your account — no more, no less — then all is well and good. But that simple transaction comes with other processes that ensures everything else goes smoothly.

One of these processes is database replication. To illustrate its importance, let’s say you withdraw $50 from an ATM. That transaction is sent to your bank’s primary database and your account balance is updated almost immediately to reflect that withdrawal. But what if something happens, say a network failure, that affects the primary database? Will your transaction be reflected correctly?

To put it simply, banks have at least of the primary database located somewhere else, called a failover database. With the use of a database replication software, the bank quickly copies your transaction to the failover database so that if or when the primary database fails for any reason, the second database will kick in immediately and take over for the meantime until the primary database is back on track.

More Customers, More Transactions, More Databases

The scenario above illustrates only one transaction from one customer. But of course, banks don’t have just one customer who performs just one daily transaction. This is why banks always have not just a secondary but even a tertiary failover database, sometimes even more. In fact, most major banks and international financial institutions have hundreds, if not thousands, of copies of their primary databases to ensure that no data gets lost.

The main concern with having multiple databases is that there is more to synchronize. It wouldn’t make sense if your $50 withdrawal will be reflected in just one or two databases; this would not only be confusing but also more work-intensive, since the system either has to find which databases haven’t been updated and change those one by one, or update everything, even those that already reflected the change the first time. Imagine that scenario for millions of customers over hundreds of databases, and you have a veritable data management challenge. This is why banks need not only a big enough storage space but also a powerful data replication solution that can handle the high-volume data movement.

Handling Contention with Data Replication

To understand contention, picture two transactions happening at once: you withdraw the last $50 from your account just as your credit card company charges you through an automatic debit arrangement that you previously authorized. Will you be able to get the cash or will the card company get credited with the payment?

With the help of data replication, contention does not present too much of an issue. Replication does generate a lot of traffic within the network, but with the right software and settings, the data can be moved quickly and the failover database(s) can confirm and reflect the changes in real-time. Speed is critical in banking, whether is $50, $500, or $50,000.

Other cases of contention include failed transactions due to network failures and other similar scenarios. You will immediately be notified by the machine that an error has occurred and, therefore, your account will not be debited the amount because of that error.

This is just a brief look at the importance of data replication in some of the most basic transactions in banking. Other applications of such technology include compliance, such as those mandated by the Federal Reserve, and the development of relationship pricing in order to appeal to more customers. The bottomline is that, while you don’t yet possess it in its physical form, your money is data and you need software like data replication solutions in order to properly and securely handle the transfer of this data.

About author

I work for WideInfo and I love writing on my blog every day with huge new information to help my readers. Fashion is my hobby and eating food is my life. Social Media is my blood to connect my family and friends.
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