First invented to record audio in the 1920s and used for storing computer data since the 1950s, the term “magnetic tape” has not been used very often within the capital markets. Bank executives, technology vendors, and their PR firms throw around industry buzz words such as “cloud,” “NoSQL databases,” and “data lakes”. But the quaint-sounding tape, is often neglected in discussions about critical financial infrastructure technologies, despite still being widely used to store data by many financial institutions.  

“There is probably nothing glamorous talking about tape,” says Rick Rhodes, principal consultant at Capco. Yet, he says, “100 percent” of his financial clients use tape for some type of data storage. 

The truth is, many cloud providers are deploying tape, and they are deploying it in scales that haven’t been seen in a long time since tape was the only storage mechanism.

Shawn Brume, IBM

There might not be anything “glamorous” about tape, but according to Mark Lantz, manager of Advanced Tape Technologies at IBM Research, the technology has been going through a “renaissance.” He made the observation while speaking last month at a live online presentation from Zurich, where IBM announced a new world record for a single tape cartridge to be able to hold 580 terabytes (TB) with an areal density of 317 gigabits per square inch. Aerial density is a measure of the amount of data that can be stored on a given unit of physical space on storage media. The aerial density scaling of hard-disk drives (HDD), its closest competitor, has slowed down in recent years to scaling at less than 8% combined annual growth rate, according to Lantz. 

Shawn Brume, global hyper-growth storage offering manager at IBM, tells WatersTechnology that many of IBM’s financial institution clients use tape for storage. “I think there is only one major bank in the world that is not using tape, and we work with all of them on developing new infrastructures,” he says. “As far as financial institutions around the world, you have to include insurance and mutual funds, and we work with all of those on tape.”

A key factor in the longevity of tape as a medium of storage is cost, especially as it is frequently used for archiving large quantities of data. In terms of a price comparison, Brume says using HDDs to store data costs around eight times more than tape. Other estimates peg the cost difference at 4x. Alex Krovina, group chief technology officer at interdealer broker Tradition—who acknowledges tape’s capacity and price benefit, but who also has reservations about the technology—says that the off-the-shelf, per-TB cost of tape can be up to 15x better than HDD at your local electronics store.

Snagging points

Krovina notes that a potential downside of tape is that if a user ever wants to get critical data off the device onto a different mechanism—whether hard drives or cloud—it takes time. First, there’s a physical component to retrieving and replaying tape, because you can only move as fast as the tape itself, unlike dragging and dropping a file from one drive to another. Additionally, during those transfer times, the data won’t be available for use.

“I definitely know that if you choose different storage mechanisms, you’re going to have different SLAs [service-level agreements] on data re-provision. … Because the tape is slow to restore, if they give you an SLA of half-a-day or whatever [to access the data], it’s likely that it’s offline, [and] that needs to be brought [back] online, connected, indexed quickly, and then restored,” he says.

As the data value proposition has changed dramatically over the last four or five years, it’s more likely that more data will need to be readily accessible across multiple jurisdictions.

Frank Desmond, FXD Data

Scott Fitzpatrick, global head TraditionDATA, the data arm of Tradition, and CEO of Tradition SEF, adds that the consistent improvement of computing power means that companies can process much larger chunks of data in a much more compressed timeframe—thus, as companies beef up their data analytics capabilities, they want closer and quicker access to their data.

“So the increase in computing power has probably forced the movement of what was data that was historically kept off-site on tapes to new virtual environments or the cloud—or more immediately accessible places—because you now have the ability to actually process that amount of data. Whereas, in the past, you didn’t [want immediate access]—it was almost the opposite model where you found the efficiency was in only keeping the data that you had the capability to process, and everything else [was kept] out the way,” he says.

Frank Desmond, director of data advisory for FXD Data, says that while there is still demand for tape-based storage “in certain cases,” he sees those cases as diminishing, not only because of the need to access data quickly, but also because firms want to be able to move data more freely across jurisdictions.

“As the data value proposition has changed dramatically over the last four or five years, it’s more likely that more data will need to be readily accessible across multiple jurisdictions,” he says. “So it’s kind of one of those things where there will always be a case for tape storage, but if your business is data, and you have a high reliance on data, then tape becomes more anachronistic.” 

What’s old is new again

Even before the need to quickly access data, tape storage had become largely a back-up tool. The type of data that is usually kept on tape is often the second or third backup copy of a data, or data that must be stored but does not need to be frequently accessed. “Your production data—the data that is required to be seen very quickly or is frequently accessed—is not the data prime copy that is going to be on tape—that is going to go to flash,” Brume says. “And really, that is how the industry in banking is changing dramatically. They are looking at moving everything into the flash tier, processing data in flash, and then if it [the data] goes cold and not accessed, it goes right back to tape in a lot of instances. That is what we call flash-to-tape.” 

Capco’s Rhodes cites an example of one financial client he worked with to help implement the requirements of the Fundamental Review of the Trading Book (FRTB). While performing risk calculations, the firm was generating a lot of data that was not of immediate interest. “You do not want to keep that data around, obviously. But you want to be able to get back to it so that when a regulator comes in looking at your numbers and says, ‘Show me how you did in Q4 last year,’ the data is there and accessible to you.”

It is the sort of data that might not be useful for day-to-day trading but is still important to keep in storage in case a trade needs to be reconstructed following a regulatory inquiry, for example. The data stored in a tape library is usually not kept on-site by financial firms, even large banks. Rhodes says it is his experience that almost all of them keep it outsourced to a third-party storage and records management facility, such as Iron Mountain. He says most of them would not keep it on-site at their own datacenter, both for space reasons, and for “separating the physical risk. If you were to lose the datacenter, you do not want to lose the tape.”

Which brings up the idea of cloud computing, which is cheap and offers fast data retrieval. Financial services firms were relatively slow to embrace public cloud for storing and analyzing data, but they are slowly changing their tune on the subject. As such, cloud is often pitted as the future, and tape will go the way of carbon paper. And for a while, tape was falling out of favor, before making a comeback.

IBM’s Brume says that this is not a “Highlander” situation where there can be only one; rather, most firms are using tape, in addition to cloud and HDD. He also notes that the major cloud providers are still relying on tape for their own back-up purposes.

“My cloud brethren are out there and they don’t talk about what they are doing in the background, because their goal is just to make it to where you have to deal with it. But the truth is, many cloud providers are deploying tape, and they are deploying it in scales that haven’t been seen in a long time since tape was the only storage mechanism. … We are seeing that surge globally of interest in tape, and deployment of tape at hyper scales,” Brume says.

He continues: “So if I am a financial institution, I don’t go, ‘Take all our data that we have on tape, and just move it to the cloud, and completely get rid of tape.’ Now, that does happen on occasion. But most of them look at it as another offsite storage of their data, and a different medium.”

Because tape is an offline medium, not even the tapes in a tape-drive attached to a server that gets ransomware attacks can change the data on tape, because the data on tape is not active.

Shawn Brume

Additionally, another reason that financial firms still rely on tape is because cloud providers—unless it is specifically written into the terms and conditions agreement—do not guarantee that a client’s data will be immediately available, he says.

“The cloud providers do not provide [immediate access] unless you go in and work [that into] the SLA with them, Brume says. “They don’t provide the guarantee that your data is going to be there; they just store your data for you at an inexpensive price and give you access to it.”

Different kinds of threats

There’s another reason why tape is once again en vogue—cybersecurity.

“The biggest form of attack today is ransomware,” Brume says. Unlike computer viruses, which can be fought off fairly quickly by isolating systems, stopping a virus in its tracks, ransomware can just sit in an environment until “everything pops at once and the whole environment goes dead.”

But tape-stored data is safe from ransomware-type attacks, Brume says. “Because tape is an offline medium, not even the tapes in a tape-drive attached to a server that gets ransomware attacks can change the data on tape, because the data on tape is not active.”

Still, tape has to deal with the original hack—someone simply walking off with a device, says Tradition’s Krovina. With tape, security literally means lock and key. On the bright side, once tape is not in active use, it can’t be hacked. But it can be stolen and then accessed with no encryption or password.

Additionally, since tape has to be physically stored, it must be kept in the right conditions or else suffer from water and mold damage, or even rodents eating through the tape, or the tape being burned in a fire.

“There’s more environmental problems that probably could go wrong,” Krovina says. “And also a little bit less, you can recover back, but then it’s the software that you’ve used to read that tape could be so archaic because you’ve had it for so long, and you’ve upgraded it, you have to make sure that that’s available.”

So it is that magnetic tape—something that some view as a hoary relic, others as an old solution to new problems—is looking to find a second life in the coming cloud-based world.