Skip to main content Skip to Footer

LATEST THINKING


Cloud computing in financial services—What’s stopping you?

Why the top cloud computing concerns of UKI financial services firms no longer apply.

Overview

Financial services organizations in the United Kingdom and Ireland are facing unprecedented challenges today: Increasing demands from customers and shareholders, intensifying pressures to drive continued cost efficiencies and ever greater regulatory requirements. To navigate these challenges, organizations should focus on creating and enabling a new ecosystem that unites and integrates the customer with digital and product-centric models.

For banks this step creates an opportunity to become a customer-centric Everyday Bank, for capital markets firms it can enable them to transform to a Digital Enabled Capital Markets model and for insurance firms it can lead to becoming a Connected Insurer. Each of these transformations brings the services of firms to the next level, and positions them to better fulfill their customers’ daily financial and non-financial life needs.

This evolution will enable banks to operate on a customer-centric model, capital markets organizations to restructure themselves and digitize their trading, wealth and asset management hubs, and insurance firms to create direct and multi-channel relationships with their customers—in each case by leveraging the full stack of cloud capabilities.

Key Findings/Analysis

Although the cloud is a major part of today’s digital agenda, financial services firms have lingering concerns about regulatory compliance that are holding them back from wide-scale adoption. These concerns include:

  1. The regulator will not approve the migration of the organization’s operations into the cloud. The Financial Conduct Authority (FCA) recently provided a new level of clarity on cloud adoption that is likely to trigger a change in how organizations approach it.

  2. There is no secure way to store data in the cloud. Third-party cloud encryption services provide additional layers of data encryption for applications that cloud service providers do not control, thus keeping data secure at all times, wherever it is stored.

  3. There is no way of knowing where my company’s data resides. All data kept in UK and EU locations meets the Information Commissioner’s Office (ICO) requirement for data residency and is compliant with the Data Protection Act.

  1. Users have no clarity or control over the operational, procedural, security and privacy mechanisms of cloud service providers. The security accreditations and certifications of cloud providers are generally far more extensive than those of financial services organizations themselves.

  2. Migrating to the cloud is too complicated. The keys to success are simple—a clearly defined strategy, roadmap and migration plan.

“We see no fundamental reason why cloud services…cannot be implemented…in a manner that complies with our rules” - FCA

Recommendations

To future-proof IT, financial services organizations should develop a hybrid cloud environment. To do so, they must:

  • Overcome their own resistance to change
  • Establish the cloud as their first option for sourcing IT and business capabilities
  • Use the cloud to scale up rapidly without the need for enormous capital investments
  • Use other provisioning models only if there are strong reasons for not using the cloud

A Cloud Management Platform (CMP) can play a crucial role in an effective hybrid cloud deployment by:

  • Reducing operational risks
  • Enforcing policies
  • Providing a service abstraction level and visibility over cloud costs

While financial services companies have generally built their own CMP to date, the complexities associated with the build-it-yourself approach mean firms should consider leveraging pre-built market offerings from cloud service providers.

Creating a well-orchestrated hybrid cloud environment will bring financial services organizations unmatched flexibility as well as the greatest value and speed to market.


DOWNLOAD THE FULL ARTICLE [PDF]