Kadri Linask-Goode, Global Privacy Lead
July 28, 2022
Data is subject to a broad range of different laws and regulations across geographic regions around the world, and balancing data governance with overarching business objectives requires an adaptive, flexible, and data-centric IT infrastructure.
According to the United Nations Conference on Trade and Development (UNCTAD), over 70% of countries have put in place legislation governing the protection of data and privacy, and we’re all becoming familiar with increasingly recognizable acronyms of data privacy legislations, such as the GDPR, LGPD, PDPA and CCPA.
Frequently this also means that firms are being held directly accountable to the local data privacy laws of each customer with whom they interact, which leaves financial services organizations in an increasingly challenging position.
Coupled with laws that include data sovereignty and data residency requirements and new cybersecurity laws applicable to financial services organizations in key markets, such as the NYDFS Cybersecurity Regulation and recent cybersecurity requirements promulgated by the FDIC, GLBA, and FTC in the United States, these all reinforce that financial services organizations need robust support to meet the multitude of stringent governance obligations when storing, transferring and securing data, whether that's across multiple data centers, in the cloud or in leveraging both as a hybrid solution.
What does this all mean?
Financial services leaders know that adhering to various global data privacy and sovereignty mandates presents unique security and data processing demands and challenges for their global organizations.
Companies will have two basic options when it comes to managing their data. They can proactively structure their network to compliantly process data to safeguard themselves from regulatory investigations, or they might scramble to follow legislation once it's enacted, increasing the potential for errors, risks of regulatory enforcement actions and added stress on the business.
Navigating complex and evolving data protection legislation also places financial services companies, with their massive volumes of data, at risk of significant fines and reputational harm.
The international law firm DLA Piper reported earlier this year that there have been nearly EUR 1.1 billion (USD 1.2 billion) in GDPR fines alone since January 28th, 2021, which is a sevenfold increase from the previous year’s total. This is a startling trend that can have a very real impact on any business’s bottom line.
The heavy burden on traditional IT infrastructure
Whether it’s for anticipating customer demands and behaviors, introducing new products and services, or proactively eliminating cyber threats and rooting out fraudulent actors, financial services organizations may need to invest in more sophisticated IT infrastructure capable of securely, efficiently, and reliably handling immense data sets compliantly.
As data accrues and processing complexity increases, it creates significant challenges for today’s IT infrastructure. The accumulation of data tends to attract additional services and applications, creating data gravity. The data gravity megatrend inhibits enterprise workflow performance, raises security concerns, and increases costs. It also adds complications to business processes and prevents companies from having the flexibility and agility needed to transform digitally.
Few industries produce as much data as financial services. According to our Data Gravity Index™, the financial services industry will continue to see a 146% compound annual growth rate (CAGR) through 2024, above and beyond data's already heavy use.
At the same time, the rapid digital acceleration due to COVID-19 has driven firms to integrate artificial intelligence (AI) and machine learning capabilities as a competitive advantage and means to strengthen customer retention and loyalty.
As robust privacy and data security capabilities become increasingly important core differentiators in the marketplace, and as data sovereignty requirements evolve, data management will continue to play a key role in the financial services business. When financial services companies create more digital-first products and experiences that meet current and future customer demands, data growth will continue to increase, and the weight of data gravity will place a heavy burden on traditional IT infrastructure.
That’s why so many are beginning to seek out a robust data-centric IT infrastructure to balance their overarching business objectives with ever stringent data protection requirements and immense data gravity.
Greater regulatory expectations on data management
Meanwhile, highly-regulated and strictly-imposed data sovereignty and privacy laws continuously place new regulatory expectations on teams shaping how they manage, process, and store customers’ personal information.
Alongside a robust data governance strategy, these enterprises need the right data-centric IT infrastructure to address data governance, sovereignty, compliance, and cyber-security demands and requirements. As businesses experience exponential data growth, a modern data-centric hybrid IT infrastructure is essential to comply with regulations.
Despite concerns about costly implementations of new and updated technology, the option to maintain legacy systems has become equally as expensive. While business leaders often view legacy, on-premise systems as safer and more reliable than cloud-based solutions, some legacy solutions may not be equipped to handle the data gravity that financial services firms manage.
New architecture of connected data communities
Enterprises should protect their data at all times to both remain compliant and maintain customer trust going forward. However, balancing data governance with overarching business objectives requires an adaptive, flexible, and data-centric IT infrastructure. With it, firms get built-in data protection measures to help secure data near the customer, adhere to sovereignty laws, and enforce compliance with the help of AI. These features also empower organizations to automate storage and protection actions by sorting and arranging data based on location and data classification.
On a global scale, this new architecture can become part of a larger set of connected data communities that provide cohesive global ecosystems of local copies of private, shared, and public data sets. These are integrated as part of decentralized workflows that traverse across multiple internal and external platforms and have the ability to better support policy enforcement control through real-time analytics and interactive cross-platform orchestration.
In these connected data communities, applications, clouds and platforms are service chained with local data sources for workflow orchestration that enables local policy enforcement, compliance, and zero trust security architecture to comply with regional and global policy enforcement controls.
Digital Realty’s Pervasive Datacenter Architecture (PDx™)
Financial services firms require a global data-centric platform that operates ubiquitously, and on-demand, augmented by real-time intelligence to best serve customers, partners and employees. We provide this through PlatformDIGITAL®, which is designed to standardize meeting your compliance objectives with distributed workflows at centers of data exchange. This is a pervasive data center architecture (PDx™) that is specifically designed to:
- Defy data gravity
- Secure data near the customer
- Assist with data compliance
- Enable artificial intelligence (AI)
- Reduce risk through secure data exchange
- Lower cost, bandwidth and duplicated infrastructure
- Grow revenue through unbounded data analytic performance
PDx™ connects more than 290+ data centers across 26 countries and 6 continents to help modern organizations manage all of their global data. Our platform is a critical resource to help financial services organizations manage and leverage their most valuable asset: data.
Making data work for your organization
With the right data management architecture, financial services firms can create significant competitive advantages.
A clear data-centric IT infrastructure enables you to know where your data is stored, how it’s aggregated, and when your data is at risk of a cyberattack. This positions your company to meet ever-changing data sovereignty and privacy requirements. With the right data architecture, the benefits go beyond that. Your organization can also manage the intensity of data gravity to create new opportunities, leverage valuable customer data to drive business growth, and cement consumer trust and loyalty to remain competitive.
Download our PDx™ solution brief to see how PDx™ scan helps simplifiy data sovereignty and privacy law compliance in the Financial Services industry.
Kadri Linask-Goode, CIPP/US, CHC, CHPC is Digital Realty’s Global Privacy Lead. With 20+ years of compliance experience and nine years in data privacy, Kadri is focused on privacy matters associated with Digital Realty’s global customers, staff, suppliers, products and operations.