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AI Readiness in Banking Demands Smarter Data Hygiene

AI is transforming banking at every level, but its promise comes with hidden costs. As institutions race to modernize infrastructure, the surge in upgrades is creating twin challenges: mounting e-waste and rising data security risks.

Stephanie Larochelle Stephanie Larochelle, a tech enthusiast and writer based in Florida, is dedicated to simplifying the intricacies of the digital world. As Blancco's senior content writer, her goal is to make data erasure easily understandable and approachable so everyone can navigate this crucial aspect of data security.

The financial sector has always been a proving ground for technological innovation. Artificial intelligence is no different, with nearly three-quarters of finance leaders reporting using it in some way. From customer service bots and fraud-detection algorithms to portfolio tracking and compliance monitoring, AI is now embedded in the way financial institutions work.

But the benefits that can be gleaned from the potential efficiency of AI also come with costs and risks.

AI depends on enormous volumes of data to generate insights, and the more historical interactions models ingest, the more accurate and valuable their predictions become. This hunger for data forces institutions to modernize infrastructure rapidly: upgrading hardware, expanding storage, and adopting high-performance systems.

Our 2025 State of Data Sanitization Report revealed that 97% of organizations have upgraded their data center assets in response to the demands of AI, with upgrades affecting an average of 21% of their equipment. Yet these rapid changes bring two cascading risks: a surge in electronic waste and a heightened risk of data breaches when outdated hardware isn’t securely erased.

97% of organizations have upgraded their data center assets in response to the demands of AI.

Secure AI readiness begins with infrastructure—and the data inside it

At its core, AI readiness depends on infrastructure: the data that fuels AI models and the devices that store and process it. Without disciplined data lifecycle policies, efficiency gains can quickly turn into compliance liabilities.

Some key considerations for organizations preparing for AI in a secure, compliant way include:

A practical roadmap for how to be AI ready in finance

Tackling AI’s risks doesn’t mean slowing innovation. It means being intentional about how you prepare, starting with the basics and building up to long-term resilience. Here’s a five-step roadmap for banks to become truly AI-ready.

1. Assess and clean your data

AI is only as good as the data it consumes. Many enterprises are finding that their systems are weighed down by ROT data. This wasted server space also increases security risks and could undermine the quality of AI outputs.

Getting rid of ROT isn’t complicated, but it does require discipline. The most effective organizations:

• Discover ROT data with file analysis tools to uncover duplicates, forgotten files, and non-business data.
• Deduplicate and classify so sensitive details like personally identifiable information (PII), protected health information (PHI), or payment card information (PCI) are properly managed.
• Enforce retention policies and securely erase expired data before it becomes a liability.
• Automate and repeat with policy-driven workflows that archive what’s valuable and permanently erase what’s not.

Start your AI journey by lightening the load. Audit what you have, erase what you don’t need, and protect what remains.

2. Bake in compliance from the start

Regulators aren’t waiting for AI to “settle down.” From PCI DSS and the Gramm-Leach-Bliley Act to local banking authority directives, financial institutions are already accountable for how they manage sensitive data throughout its lifecycle. That means compliance obligations extend beyond active use to how information is retained, archived, and ultimately erased.

Secure erasure sits at the center of this challenge. Legacy approaches like degaussing or shredding may destroy hardware, but they can leave data behind, expose organizations to fines, and create massive e-waste. Certified erasure software, by contrast, provides verifiable proof of compliance and supports ESG goals by enabling reuse and extending asset lifecycles.

That’s exactly the issue Sacombank in Vietnam faced. As one of the country’s largest retail banks, it had to comply with both PCI DSS and strict State Bank of Vietnam regulations. For years, the bank relied on physically destroying decommissioned drives—an expensive process that left blind spots in tracking and auditability.

By adopting Blancco’s secure erasure solutions across PCs, servers, mobile devices, and even loose ATM drives, Sacombank was able to centralize reporting, generate tamper-proof audit certificates, and prove end-to-end compliance. In the process, it reduced costs, simplified audits, and created a sustainable path forward for hardware reuse.

3. Secure the hardware lifecycle

AI adoption is accelerating refresh cycles. Servers, laptops, and mobile devices are being retired faster than ever, yet every one of those assets is a potential breach if not handled properly. The lifecycle doesn’t end when a device is purchased or used—it ends when it is securely erased, repurposed, or recycled.

Too often, organizations still put their trust in physical destruction, assuming shredding or degaussing makes data disappear. In practice, these methods can leave gaps. Weak chain of custody, falsified certificates, and poor asset tracking create openings for exposure.

The risks aren’t hypothetical. In the U.S., a former ITAD driver stole and resold hundreds of government-issued laptops, smartphones, and servers that were slated for destruction. He even provided fake destruction certificates to buyers, claiming data had been erased. The theft exposed how easily end-of-life devices can slip through cracks—and how physical destruction without verification creates cascading risks.

Certified, software-based erasure closes those gaps. By permanently wiping data at the point of decommissioning, organizations eliminate the risk of breaches even if devices are lost or stolen downstream. Tamper-proof, digitally signed certificates provide verifiable proof for regulators and auditors, something paper certificates simply can’t match.

Best practices for securing the hardware lifecycle:

• Erase first. Sanitize data before devices leave your control, even if they’re headed for shredding.
• Require tamper-proof certificates. Immutable, cryptographically signed reports are the only reliable proof of erasure.
• Tighten chain of custody. Audit vendors, enforce secure transit, and integrate erasure into your IT asset workflows.
• Plan ahead. Build end-of-life erasure into procurement so every new asset already has a secure exit strategy.

4. Build sustainability into data practices

AI’s appetite for computing power is pushing enterprises to expand storage and refresh hardware at an unprecedented pace. But the more data you store, the more energy your infrastructure consumes—and the bigger your data center carbon footprint. Left unchecked, this growth undermines ESG commitments and raises costs.

The good news: sustainable data practices align directly with stronger governance and security. By classifying and erasing ROT data, enterprises cut down storage volumes, reduce emissions, and shrink attack surfaces all at once. Secure erasure also enables reuse of IT assets, extending lifecycles instead of adding to the mounting e-waste problem.

5. Continuously improve

AI readiness requires ongoing attention. Regulations will tighten, data volumes will grow, and threats will become more complex. The organizations that will succeed are those that treat data governance as a living process rather than a one-time project.

That means scheduling regular audits of data practices, testing governance policies against new requirements, and refining hardware disposition plans as technology changes. Centralized monitoring and verifiable erasure reports make it easier to detect weaknesses early. Automated workflows reduce the risk of inconsistency and free staff to focus on higher-value work.

Each cycle, whether it’s a new AI rollout, a data center refresh, or a compliance audit, becomes a chance to improve efficiency, reduce risk, and strengthen trust. Over time, this steady commitment builds resilience and gives AI a secure foundation to scale responsibly.

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