As data consumption becomes more diverse, the question of how data is stored and managed becomes a hot topic. Given the volume and sensitivity of the data an organization collects, data localization regulations have eliminated data privacy concerns regarding the management of that data. Data localization refers to the process of keeping data within the geographic region in which it originated. When a business collects data in the UK, it stores that data there rather than sending it to another location for processing. Data localization aims to protect residents’ financial and personal information from international surveillance while empowering domestic governments and regulators to request such information when necessary. increase. Where a country’s data protection regime permits the cross-border movement of personal data concerning its citizens and residents, data controllers and data processors may not always be able to honor their commitments. not.
Many countries have adopted data localization regulations to address public data transfer concerns. Even in India, which does not have a comprehensive data privacy law, there are rules for data localization. For example, Section 94 of the Companies Act 2013, read in conjunction with Sections 88 and 92, requires covered organizations to keep financial information at the company’s registered office. Paragraph 2(i) of the Reserve Bank of India Directive 2017-18/153 (issued on 6 April 2018) provides for the local storage and handling of sensitive data belonging to multiple Indian users under the Payment and Settlement Systems Act, 2007. I am asking the organization to process it. online payment service. Paragraph 3(9) of the IRDAI (Maintenance of Insurance Records) Regulations, 2015 mandates organizations to keep insurance data in India.
Challenges to data localization.
As data localization regulations are dynamic in nature and government authorities are formulating regulations to meet new challenges, organizations must remain agile and flexible while ensuring compliance. . And for multinational companies, data localization legislation includes regulations on data storage requirements (such as data security within data centers), different rules for different data sets, and different regional regulations. It is also important to note that They are often inconsistent with each other (such as the globally applicable US anti-money laundering rules, but in many countries data localization rules prevent the exchange of information). This means that data localization poses many challenges for organizations. Beyond this, there are also technical issues, such as identifying all systems that store sensitive information and deploying controls over them, and hiring experts in various geographies to ensure compliance. Data localization regulations are forcing companies to change their traditional unified approach to data management. Organizations that used to excel at thinking globally must now think locally. The need to invest time, effort and management to understand the characteristics of each regulatory jurisdiction in which you operate increases local compliance costs. Heavy fines and punitive measures (EU, Russia, China, etc.) mean that organizations cannot tolerate non-compliance.
Another important issue related to creating data localization is that of data centers. Businesses, organizations, and other online-based entities rely on data centers to manage, analyze, store, and distribute large amounts of data. Unconstrained by regional boundaries, our scalable cloud service provider makes data centers accessible in India and beyond. This means that data center services can be used by various companies/entities around the world by paying a fixed fee (without having to physically visit the facility). In addition to storage, people are increasingly concerned about how organizations collect data and their privacy policies. Additionally, strict data localization laws will prevent organizations from relying on data centers in other countries.
Benefits of data localization
Local storage of data helps reduce network latency and increase speed. Businesses can hire top talent at reasonable prices and increase transaction efficiency thanks to the localization of data storage and strong market forces such as the expansion of cloud, user data and e-commerce. In addition, data localization has developed into an important commercial factor for enterprise companies. They have benefited from it in many ways, including centralized leadership, removal of roadblocks, improved profit margins, data storage and management enabled, security, and extraordinary development potential. .
Efficient data localization practices should bring great success. One of them is ensuring an optimized customer experience. For example, companies can deliver customized experiences wherever their customers are, innovate faster with larger and more diverse data sets, and create new businesses with the assurance that they can change strategies as needed. You can quickly expand to your region. Additionally, by implementing a repeatable data localization approach, businesses can efficiently move from one area to the next and reduce costs. Additionally, staying compliant allows management to look away from regulatory concerns.
In particular, establishing itself as the authoritative source of information on digital identity and data privacy and as the custodian of customer data can help businesses enhance their reputation and attract new customers. Some companies go head-to-head with their competitors, pointing out to their clients that they have not implemented the same data security as theirs.
Data localization can seem like a daunting task, but an organization can have an effective data localization policy by working methodically.
- The first step is to identify your exact needs, determine the steps required, and thoroughly review the underlying regulatory requirements.
- Next, it’s important to examine the market potential in a particular region or country to see if it’s justified to have your own IT and data infrastructure.
- Organizations should then define potential regional IT and data operations target states, considering how much the business will rely on local suppliers or develop its own localized skills. there is.
- Proper planning and budgeting with the help of relevant international and regional data and IT teams is essential.
- Next, businesses should identify specific privacy and security measures. These include tokenization to protect personally identifiable information (PII) during migration to local infrastructure, and field-level encryption to protect sensitive personal data.
- Finally, companies will be able to organize the actual data migration and safely install local operations and infrastructure.
As data becomes the ‘new gold’, authorities and citizens are understandably concerned about how it is stored and handled. Data localization can seem like a daunting task, but if done efficiently, it can be a win-win for businesses while increasing trust and transparency between government authorities and customers.
Several new data localization methods are emerging around the world. Although the rationale for each is different, the problems facing IT and data landscapes can be very similar. Companies that can flexibly respond to this legislative change may gain a significant competitive advantage. However, this requires the assistance of many professionals, from legal counsel to engineers.
The guidelines for better privacy management and management are easy once you understand them. Once they’re ingrained in your behavior, they can help protect you from common fraud tactics. If you would like to perform an audit of your consent practices, please review our regulatory compliance services and click here to book a call with one of our experts.