As more companies shift towards the cloud, data-driven wealth management platform WealthArc has compared cloud-based and on-premise wealth management solutions to see which comes out on top.
Before diving into the benefits of a cloud-based system, WealthArc acknowledged that on-premise tools offer some great benefits. These include greater control and customisation. However, these on-premise solutions are often accompanied by multiple hidden costs, which depend on the nature of the tools used and the size and complexity of the organisation’s operations.
Before a firm looks to use an on-premise solution, they should consider the total cost of ownership, WealthArc said.
To deploy and maintain local tools, it requires a significant investment in hardware and network infrastructure. This includes servers, storage devices, licence costs, backup systems and other components. Further to this, on-premise systems require regular maintenance so they run smoothly, adding to costs and the need for specialised skills.
Another challenge that faces on-premise tools is integrating them with other systems and applications. This task can often require significant resources, such as developing custom interfacing or middleware, as well as testing and troubleshooting.
Alternatively, cloud-based solutions remove the need for maintenance and system updates, allowing teams to focus their efforts on business strategies. As the software and infrastructure is hosted by a third-party provider, companies do not need to invest their own hardware, networking or IT personnel.
WealthArc added that cloud-solutions often offer more flexibility and scalability than on-premise tools. They allow companies to quickly adjust their usage where needed, based on the requirements of the business.
Security challenges
WealthArc stated that while it might seem like on-premises tools are more secure than cloud solutions, that is not necessarily the case. It stated that implementing an on-premise tool requires additional security measures to protect it from data breaches or other cyber threats. These security measures include firewalls, intrusion detection systems and more.
While cloud-based solutions need protections, it is easier for them to recover data. It said, “As we in the wealth management industry know, data is the gold. You cannot lose your data, otherwise… well, you are in trouble. With cloud-based solutions data recovery is much easier and data backups are placed in the cloud. So, if anything bad happens, true SaaS will help!”
As to whether companies should seek on-premise tools or cloud-based solutions, WealthArc concluded, “The choice between a more traditional on-premise solution and a cloud solution will always demand particular care and will depend 100% on the needs and business requirements of a particular organisation. However, more companies want to take advantage of today’s efficient operating models, so they choose the cloud. Especially if it leverages cloud from one of the top providers on the market – Microsoft, Amazon or Google.”
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