Regulation and how financial services can stay compliant
The Financial Conduct Authority (FCA) is setting up a team to prosecute companies that fail to meet basic regulatory standards in a crackdown on what it calls ‘problem companies’ in the services sector financial.
Industry authorities are also concerned that if one of the major cloud computing companies suffers a hack, outage or service interruption, it could have a serious impact on the financial services, institutions and banking systems that depend on it. In response, the Prudential Regulation Authority (PRA) intends to step up its scrutiny of AWS, Microsoft Azure and Google Cloud, according to a report from the FinancialTimes.
Last year, the Financial Stability Report of the Financial Policy Committee (FPC), an official committee of the Bank of England, expressed similar concerns about the UK financial system. His fears center on operational risks and how financial services organizations can comply with regulatory changes while meeting their need for cloud computing.
The risks and benefits of cloud technology
It’s no exaggeration to say that the impact of a compromise at one of the major cloud service providers could spread across the entire financial services market and threaten the global economy.
At the same time, with rapid digitalization over the past three years and ever-changing UK legislation accelerated by Brexit, it is understandable that financial services organizations have turned to the benefits offered by cloud providers.
Ensuring financial stability means improving compliance – as a key strategic focus for today’s business leaders, we already see a third (32%) of decision makers using data analytics to improve compliance. approach of their organization. Therefore, the data analytics and management strategies adopted by financial institutions become another key risk mitigation measure to consider.
To manage the growing volume of data received every day, organizations use multi-cloud hybrid platforms, which also support a proactive approach to meet compliance in the face of complex and ever-changing rules set by regulators.
Storing data in-house reduces data flexibility and increases operating costs. A cloud-based approach has the advantage of providing data dexterity, especially for traditional banks that want to keep pace with their neo counterparts not to mention cost savings as well.
Improving data analytics for financial services organizations often means changing the way banks store and manage data. A hybrid multi-cloud platform allows companies to manage data across multiple sites, using an on-premises or private cloud, allowing them to react to regulations as they change and optimize operations.
Leveraging these benefits means balancing the financial services industry’s obvious need to deliver the technology while addressing industry concerns about the reliance of cloud services on a handful of dominant players.
A model of shared responsibility
A shared responsibility model is a cloud security framework. It ensures accountability by dictating the security obligations of a cloud computing provider and its users.
Financial institutions oversee the storage and processing of data. The responsibility of cloud service providers (CSPs) is for security actions at the lower level of the infrastructure. Being responsible for cloud system security and assessing CSP compliance means that every financial organization is responsible for ensuring the security and governance of its cloud deployment. Regulators support simply by determining the rules to help reduce risk.
Responding to many concerns from financial institutions and regulators about the dangers of cloud concentration, innovations in a comprehensive hybrid and multi-cloud architecture.
The next step in cloud computing
The time is right. A recent report on building resilience in the cloud by the Association of Financial Markets in Europe (AFME) indicates that the financial services industry is moving towards a hybrid, multi-cloud framework – with 63% of surveyed financial organizations having intend to adopt the approach.
The innovation of open source software networks year after year, complemented by the widespread adoption of cloud computing, greater volumes of data to manage, heavier workloads and security requirements across multiple platforms , has resulted in a new generation of big data platforms.
Modern hybrid data architecture unleashes the full capacity of an organization’s data. Optimized for a holistic approach, a hybrid, multi-cloud environment means that all platforms have the same management capabilities and full data and application portability. As a result, businesses can operate more efficiently, better serve customers and meet strategic business needs, and benefit from greater security.
The architecture creates a unified interface for data governance that spans the entire hybrid landscape, helping to address cloud-related operational and management risks related to governance and transparency issues. With streamlined integration across the technology stack, enterprises can manage the various security and governance policies for all deployed technology solutions, removing vulnerabilities that occur at borders.
For banks and financial institutions, streamlining data management, strengthening compliance-related security measures, and reducing costs enable businesses to use the cloud more efficiently. It also helps them stay competitive.
By avoiding cloud provider lock-in, financial services and banks limit the risk of their operations being interrupted by a hack or service outage. In addition to eliminating data silos and strengthening security and governance capabilities for all data in the ecosystem, organizations continue to benefit from open source innovation.
Finding balance through collaboration
To address concerns about cloud concentration without losing the benefits that come from cloud technology innovation, regulators and organizations in the financial services industry need to work together.
The advancement of the enterprise data cloud helps provide this balance – empowering financial services organizations to deliver an agile data strategy that can respond to industry changes for long-term success.