Why Data Repatriation Is a Growing Trend
Two challenges often associated with the cloud are security and spending. While providers have taken steps to mitigate security risks, the offsite location of sensitive data makes security practices more complex. Costs, meanwhile, are often tied to cloud sprawl. Research found that 21% of enterprise infrastructure spend is now wasted on underused resources, and many companies find that over time, their cloud spending steadily increases despite efforts to keep costs down.
In isolation, cloud spending and security may be problematic. In combination, they can lead to spending money that may be better used keeping data close to home.
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Where On-Premises Is the Best Option
For FSIs, there are several cases where moving back on-premises may be the better option.
The first is improved compliance. Financial institutions need to maintain robust risk management frameworks to identify, evaluate and mitigate risks related to their technology use and reliance on third-party or outsourced service providers.
Regulations such as the EU's Digital Operational Resilience Act aims to enhance the digital resilience of financial entities by setting standardized requirements for managing risks associated with cloud providers, ensuring secure, compliant and orderly contractual arrangements to protect customer data and services.
The act went into full effect in January of this year. The California Consumer Privacy Act, meanwhile, requires companies to safeguard “sensitive information,” which includes personal, commercial and biometric data but also applies to text and email messages. Keeping data closer to home can help FSIs better manage changing regulations.
On-premises data can also help financial firms make better use of AI tools. For example, emerging methods using both generative and predictive AI tools may be used to facilitate investment or spending decisions. The AI models designed to make these decisions require massive amounts of information, and the data must be available to accelerated computing with as little latency as possible, meaning that the closer data is to AI infrastructure, the better the results.
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Where Cloud May Be the Better Choice
There are also scenarios where the cloud makes more sense for FSIs. Consider the anonymized customer data that is frequently used to monitor trends and track operational metrics.
While it’s possible to keep this data onsite, the sheer amount of information financial firms collect every day makes this an expensive and time-consuming process. This approach can also lead to increased costs since companies need to budget for extra storage space that may be unused but available as data volumes increase.
Instead, FSIs are often better served by adopting a tiered model that sees functional, noncritical data moved into public clouds. More sensitive data might live in colocated data centers, while highly sensitive data used for investment modeling or required to demonstrate regulatory compliance is kept onsite.
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Moving data back on-premises can help FSIs improve compliance and make better use of AI. But not everything needs to be under one roof. For anonymized data accessed often or compute-heavy processes that don’t need to be lightning-fast, staying in the cloud often makes more sense.
Is migrating back on-premises the smart move? Yes — or, perhaps, no. Consult with a CDW expert today to find the best-fit solutions for your business.
This article is part of BizTech's EquITy blog series.
