Financial regulators are not only endorsing the benefits of cloud computing services, they’re also taking advantage of them, amid a wider migration of processes that is helping to transform the banking industry from the inside out.
It goes without saying that financial regulation and cloud technology have not always been obvious bedfellows, but that is all changing.
With the financial services industry currently enjoying a period of unprecedented innovation – from agile payments platforms to easily accessible mobile banking apps – we are now seeing evidence of a dramatic regulatory shift that’s in turn serving to inform some of the industry’s biggest developments.
Fundamentally, regulators are recognising that businesses need to be more nimble and use the cloud to realise planned and unscheduled changes swiftly and smoothly. They’re also recognising the marked security benefits, noting that if cloud computing is procured properly, then it can be as robust as your own infrastructure.
Stateside, the Financial Industry Regulatory Authority joined the revolution in 2014, and according to those that work there, the ground-breaking transition was seamless (The Alert Investor, 2016).
Not only that, it moved its most critical functions and instantly achieved eight times its previous capacity, allowing it to easily process 75 billion records and achieve major savings into the bargain.
FINRA’s Chief Information Officer, Steve Randich insisted that, thanks to the cloud, the organisation could now operate without constraints, finding that it was enabled to “build an infinitely large database” and “employ state of the art search capabilities to create robust analytics”.
Here in the UK, the Financial Conduct Authority took a similarly positive stance last year (The Register, 2016), recommending cloud migration to financial organisations, and stating that there was “no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules”.
The FCA said that, with the right safeguards in place, banks, insurers and other financial services companies were now in a great position to take advantage of cloud computing services, thanks to “improved choice and innovation in outsourcing,” delivering “commensurate benefits for firms and consumers”.
Likewise, financial organisations in the Netherlands will now be able to use Amazon’s public cloud services in various ways, after the country’s regulator, De Nederlandsche Bank (DNB), announced that they were now clear to migrate “all facets of Dutch financial operations”.
It effectively means that Dutch organisations are free to take advantage of the increased security and reliability of the cloud while still complying with all outsourcing legislation. Indeed, many are reportedly moving their entire retail operation (Computer Weekly, 2016).
Ultimately, such enhanced confidence potentially creates a fertile environment where exciting new innovation might be pursued without the regulatory hindrances of old – and the ability to innovate, adapt and progress to meet heightened customer demands is increasingly separating the industry’s winners from the losers.
Optimal regulatory policy must encourage controlled growth of innovation without stifling it, balancing risk with disruptive ideas – and that’s exactly what we’re now seeing.
The result? More agile, scaleable, forward-thinking financial services without the need to sacrifice customer confidence.
Never have regulatory demands and the cloud been so closely aligned. Pursuing a vertical cloud strategy is now firmly accelerating financial enterprise for business growth and competitive advantage, while also mitigating security and compliance.
A global wave of cloud services adoption is here – and increasingly, it’s a match made in heaven without any compromise.
The Alert Investor (2016) ‘How the cloud is changing financial regulation’, available at: https://www.thealertinvestor.com/how-the-cloud-is-changing-financial-regulation/ (accessed 11 March 2016)
The Register (2016) ‘FCA paves the way for cloud computing in financial services’, available at: http://www.theregister.co.uk/2015/11/17/fca_paves_the_way_for_cloud_computing_in_uk_financial_services/ (accessed 11 March 2016)
Computer Weekly (2016) ‘Dutch banking regulator approves use of AWS public cloud in the financial sector’, available at: http://www.computerweekly.com/news/2240202671/Dutch-banking-regulator-approves-use-of-AWS-public-cloud-in-the-financial-sector (accessed 11 March 2016)