No wonder cloud is making significant inroads among financial services organisations with a recent Cloud Security Alliance report finding that 91% are actively using cloud services or planning to employ them within six to nine months. For context, that number has doubled in the space of just four years. 

Reinforcing the trend, Reuters recently published IDC figures predicting that spending on cloud services by banks would grow from $32.1bn in 2020 to $85bn in 2025. 

Early concerns 

One of the initial areas of concern for regulators was operational resilience. They were understandably exercised by the shared responsibility model existing between cloud service providers and financial services firms. It was clear that financial services firms needed to retain ultimate responsibility for all activities they outsourced to cloud service providers, requiring a definitive contract covering the activities and obligations of each party. 

Focus has turned to the reliance of banks on a small number of big technology companies for cloud computing and the potential impact of an outage on critical services. The Bank of England and other regulators have mooted a solution involving a global combination of minimum resilience standards and testing. 

Risk management was another area where financial regulators needed to be convinced that cloud service providers had robust practices that met the stringent requirements of the financial services environment. 

Security improvements 

Despite these early obstacles, regulators have come to appreciate that cloud can help strengthen the security controls of financial services firms by providing a complete, real-time inventory of assets and how they are protected. 

By their nature, cloud service providers need to be experts in security and data protection. They have teams dedicated to the task of protecting their infrastructure and customer data. They are better prepared to deal with cyber-attacks than financial services firms because their business requires an ongoing investment in cybersecurity. 

With their greater scale, flexibility and processing power, cloud service providers can give financial firms access to more advanced infrastructure and security technology. 

Wide range of benefits  

The cloud can dramatically streamline and modernise the way that firms fulfil their obligations to financial regulators, delivering a range of benefits that can drive efficiencies for financial regulators. 

Increased visibility  

There has been a massive increase in the generation of financial data placing an even greater onus on firms to be able to access and manage it. Cloud solutions come into their own when it comes to data management and storage.  

Access to modern technology 

Cloud reduces the risks to financial services firms of having to maintain and manage complex legacy IT environments. It gives them the ability to tap into the power of big data and technologies such as artificial intelligence to offer customers better tailored products. 

Better value 

Banks need to be able to monitor upcoming regulatory requirements that might impact the business. In an increasingly data-driven world, cloud-based solutions allow for centralised collection, analysis and real-time understanding of the implications of the results. 

Freedom to innovate 

With the agility provided by cloud comes the power to innovate more easily. New ideas, processes and procedures can be introduced faster when all stakeholders can work together seamlessly.  

Automation pays off 

Automation is a bedrock of cloud. It helps to eliminate manual processes, resulting in more accurate data and a clear audit trail.  

Safe and secure 

Security is always a concern. Cloud solutions have never been safer and are as reliable and robust as physical infrastructure. When configured correctly, cloud services can provide additional layers of security for institutions and decrease risk. 

Cloud technology can help financial firms to achieve agility and scalability, modernise their interactions with regulators and drive efficiencies.  

For more information on how we can help you drive efficiencies with Cloud, request a demo.  

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