Classification is the process of assigning a level of sensitivity and handling requirements to data, which informs its lifecycle management, retention, and disposal methods. In regulated industries such as banking, proper data classification ensures that data subject to legal or regulatory requirements is destroyed according to those requirements at the end of its retention period. This directly guides how the data should be handled and disposed of.
Reference:
CompTIA Security+ SY0-701 Official Study Guide, Domain 5.4: "Classification dictates data handling, storage, retention, and destruction policies in compliance with regulatory requirements." Exam Objectives 5.4: "Given a scenario, implement data security and privacy practices."