Data Retention Requirements for Banks

Financial institutions such as banks, investment firms, and credit card companies need to interact with a large number of customers every day. As a result, they are constantly dealing with confidential and sensitive information which are important data for them. in accordance with laws, regulations and business needs, long-term retention of these data is quite necessary. 

What is banking data?

Data is the core foundation of a bank's business and management and has a significant impact on its operations and decision-making.

Banking data refers to various types of data stored in the banking system, including customer information, account balances, transaction records, loan information, interest rates, and so on.

The type of data that needs to be retained in the banking industry is prescribed by the regulators and may vary from different countries and regions. The retention time of data in the banking industry needs to comply with relevant laws, regulations and regulatory requirements, and be adjusted according to the bank’s own business needs to ensure data compliance and security. At the same time, banks need to categorize, archive and back up their data so that it can be quickly retrieved and accessed when needed.

Why long-term data retention is required in financial institutions?

Laws and regulations require that financial firms need to retain data for long periods of time to support business needs and tracking customers’ transaction history to understand their investment preferences and risk tolerance.

1. Legal and regulatory requirements: The financial industry needs to comply with various laws and regulations, such as securities laws, banking laws, tax laws, etc., which require financial institutions to keep specific types of data and provide them to regulators or legal authorities when needed.

Here are some of the regulations related to bank data retention.

Bank Secrecy Act (BSA): The BSA is a federal law that aims to combat money laundering, terrorist financing, and other financial crimes. Under the BSA, banks are required to establish and maintain appropriate policies, procedures, and controls for recordkeeping and retention of certain financial records. This includes retaining records of customer transactions, suspicious activity reports (SARs), and other related documentation for a minimum of five years.

Federal Deposit Insurance Corporation Improvement Act (FDICIA): FDICIA requires insured banks to establish and maintain a comprehensive system of internal controls and procedures for financial reporting. This includes maintaining records that support the bank's financial statements and disclosures for at least five years.

General Data Protection Regulation (GDPR): The GDPR is a European Union regulation that governs the protection and processing of personal data. Banks operating in EU member states must comply with GDPR requirements, which include retaining personal data for no longer than necessary for the purposes for which it was collected.

2. Business needs: Financial institutions need to retain data over time to support business needs. For example, financial institutions need to track the transaction history of their customers to understand their investment preferences and risk tolerance, and they need to keep financial statements to monitor business performance and financial position. This type of data is entirely determined by business needs.

3. Risk management: Financial institutions need to retain data over time for risk management purposes. For example, financial institutions need to keep transaction records for investigations and audits when needed, and customer information for anti-money laundering and counter-terrorist financing monitoring.

4. Historical analysis: Financial institutions need to retain data for historical analysis. For example, financial institutions need to analyze past trading data to understand market trends and predict future market movements, and they need to analyze the past investment records of their customers to understand their investment behavior and preferences.

Two main aspects on which the bank's data backup retention strategy is based:

Different banks may have different retention policies when it comes to data backup. Generally speaking, the bank's data backup and retention strategy is mainly based on the following two aspects.

1) Regulatory requirements: Banks need to comply with regulatory requirements to back up certain data and retain it for a certain period of time. Banks need to develop appropriate data backup retention strategies based on regulatory requirements.

2) Actual business requirements: Banks' backup strategies also need to take actual business requirements into account. Different banks differ in terms of business scale, business type, data volume, etc., so their backup strategies need to be formulated according to the actual situation.

Protecting your financial data with a Vinchin solution

For reliable data security and backup, banks and finance companies can rely on Vinchin Backup & Recovery, a fast, reliable and robust Backup & Recovery solution for various environments, which supports data backup of VM like VMware vSphere, Hyper-V, XenServer, XCP-ng, oVirt, RHV, OpenStack, etc. and other data like database, NAS, file server, etc. Vinchin also provide ransomware protection to protects your backup storage from any malicious attack and potential danger.

In addition, With Vinchin Backup & Recovery, you can archive data backups to Amazon S3, Microsoft Azure, Wasabi and MinIO to ensure that your critical on-premises backups can be easily connected with cloud to achieve complete data protection.  

There is a 60-day full-featured free trial of Vinchin Backup & Recovery. Just download and quickly deploy it to protect your data right now.

Sum Up

The financial industry requires long-term data retention to meet legal and regulatory requirements, business needs, risk management and historical analysis. These data can serve as important assets for financial institutions and help improve operational efficiency and risk management capabilities. That's why banks should back up their data in a timely manner to safeguard their daily business operations and cope with various emergencies. And next article will take you to understand the types of data that banks need to back up and how they backup data.