Banks must be able to access a customer's information from any branch at a moment's notice. These information requests can include checking account balances, loan amounts and credit status. A distributed database system separates a business's data by business function or geographical area. Banks often use distributed database systems, because these systems are configured to carry out specific business tasks in different locations while allowing those locations to communicate freely with one another. These systems offer banks several advantages over nondistributed systems.
A database management system that requires banks to access financial data stored in a central location can be vulnerable to downtime. The central location may be inaccessible due to communication infrastructure problems, natural disaster or malicious attack. The distributed system lets banks access the information they need at any time, regardless of the uptime status of a central server. A distributed database management system allows banks to reroute their information requests around the inaccessible location to another available site.
A distributed database management system relies on multiple processors distributed throughout the network, and this is a plus. The distributed nature of the network allows each processor to take on part of the data access chores, rather than relying on a single processor to handle all the requests at once. This system allows banks to access the data they need faster and more reliably than they would with a centralized system.
A distributed database management system allows each bank branch to have its own copy of the latest customer data. The bank's copy of the customer's account data allows the bank to record and process each transaction locally, rather than sending it forward to a central server. The ability to process transactions locally saves on communication costs. If a problem occurs with the local system, it can be addressed at the local level, which also saves time and money.
A centralized database management system often lacks the flexibility to handle substantial growth. When such a system needs to expand its capabilities, the bank may need to purchase new equipment, upgraded software or both. The distributed database management system structure supports modular growth. As a bank expands into new geographic areas or offers new financial services, database managers can add the new functionality to the distributed database system without affecting the current system's functions.