Why vaultless tokenization is a game changer

Data can be both an organization’s biggest asset and its greatest risk. With cyber threats increasing and regulations tightening, businesses must prioritize protecting sensitive information—customer records, financial data, and intellectual property. The average data breach in 2024 cost over $4.5 million, but the real damage often comes from reputational harm and lack of customer trust.

As an engineering leader with two decades of experience and the inventor of key tokenization technologies, I’ve seen firsthand how innovative security strategies redefine compliance and risk management. 

Organizations can be met with significant penalties if they don’t meet the growing amount of sensitive data requirements. To meet these standards, businesses need strong data protection strategies that balance security with operational needs. 

Organizations use different techniques to secure data, but each has trade-offs:

• Masking: Partially obscures data at runtime (e.g., showing only the last four digits of a credit card). Great for display but loses data utility and ineffective for stored data as it is an irrecoverable operation.

• Redaction: Permanently removes or obscures sensitive information, making it unusable for future processing.

• Encryption: Converts data into unreadable code, but federated complex key management makes it vulnerable if keys are compromised. A compromised key will allow someone to decrypt any data encrypted in future.

• Tokenization: Replaces sensitive data with a non-sensitive token, reducing exposure risk while maintaining usability.

As part of our cloud migration, Capital One made a key decision to tokenize our sensitive data in  the cloud. To handle the scale and volume of data, we developed an in-house tokenization engine that processed billions of operations per month. This platform enabled us to secure PII and PCI sensitive field elements for operational and analytical data stores, enhancing our company's security posture.

This technical journey compelled us to explore how we could help other companies benefit from tokenization. 

Tokenization minimizes exposure risks while keeping data usable. It also simplifies governance by reducing the amount of sensitive data stored in primary systems. Two primary approaches – vaulted and vaultless tokenization – offer different advantages depending on your use case. 

• Vaulted tokenization stores a mapping between original data and tokens in a secure database or vault. This centralized approach provides structured management, but comes with certain operational considerations:

  • Centralized security: Data mappings are maintained in a single, controlled environment.

  • Scalability considerations: Querying and managing a vault can introduce processing overhead due to dependency on database/mapping tables.

  • Performance & cost impact: Lookup processes may add latency for real-time applications as lookup from the vault would be slow. This can be mitigated with additional caching later for read resulting in additional cost.

  • Infrastructure requirements: Maintaining a vault requires additional storage, cache and management resources.

• Vaultless tokenization dynamically generates tokens without a central database, offering a more flexible and scalable approach:

  • No central vault to attack: Eliminates a single point of failure, enhancing security.

  • Real-time performance: No lookup delays, enabling faster data processing.

  • Improved scalability: Reduces infrastructure complexity, making it easier to support growing data needs.

  • Lower operational overhead: Eliminates the need for dedicated vault storage and management.

In many cases, a vaultless tokenization solution can help businesses looking to prioritize enhanced security, real-time performance, improved scalability, and lower operational overhead. As cyber threats continue to evolve, companies need a security solution that is strong, scalable, and future-proof, and vaultless tokenization effectively addresses all these critical requirements.

For engineering leaders, CISOs and executives, the message is clear: Data protection isn’t just an IT task—it’s a strategic necessity. Vaultless tokenization can be an impactful next step in safeguarding valuable data while keeping business operations running smoothly.

Databolt offers a solution to common data protection challenges through its patented vaultless tokenization technology. This approach is built upon homegrown innovations by Capital One, including patented methods for Vaultless Tokenization (US Patent 12,287,902), High-Performance Tokenization (US Patent 10,956,591), and Obfuscating Cryptographic Material (US Patent 11,604,740).

Unlike traditional tokenization methods that often rely on centralized vaults, which can introduce latency and bottlenecks, Databolt's vaultless design is engineered to minimize performance impact, even at scale. This allows organizations to maintain consistent performance, ensuring that data protection doesn't impede analytics or operational processes in high-speed, high-volume environments.

The architectural design of Databolt prioritizes operational flexibility, integrating with existing applications and data workflows without requiring tokenized data to leave your environment. This includes a deployment model built for cloud environments, helping ensure that tokenized data remains within your control. Furthermore, Databolt provides centralized data governance capabilities, offering policy management and access controls directly within the platform for consistent protection across your entire data landscape. Comprehensive logging also provides detailed visibility into all tokenization operations. 

By combining robust security with scalability and ease of integration, Databolt empowers organizations to protect their most sensitive information while maintaining the speed and agility essential for business operations.

Ready to rethink your data security strategy? Request a demo to learn more about how Databolt can help.