FinTech Podcast #288

The digitisation of services and globalisation have led to significant changes in the methods of data collection, access and use. Especially in the banking industry.
This has recently contributed to an increased interest in cloud computing as a means of supporting the digitisation of financial services. This is not just about storing data in the cloud, but also about outsourcing your computing power in line with business needs. In this way, cloud-based infrastructures can be a driving force for better software performance, data analysis and new technologies such as distributed ledgers and artificial intelligence. Cloud computing is driving both the digital transformation of banks and the EU’s single digital market.

However, due to the strict regulatory environment in which they operate, banks have been rather reluctant to use cloud services compared to other industries. Accordingly, legal and regulatory constraints limit the adoption of cloud services in banking, but the lack of harmonised regulatory approaches in different jurisdictions and between regulators also contributes to a high threshold.

Cloud banking and its regulatory requirements

Furthermore, the use, administration and storage of customer information is associated with higher compliance risks, especially in an international environment and with regard to data and security guidelines (e.g. GDPR or DSGVO).

Contract negotiations between banks and Cloud Service Providers (CSPs) face considerable frictional losses.

Cloud computing now exists in many forms (private, public, hybrid). Public cloud solutions enable service providers to provide resources such as applications and storage over an accessible network where multiple customers can share the same resources. A hybrid cloud is an integrated cloud service that uses both private and public clouds to perform different functions within the same organization.
These forms can be provided through various service models.

The path to a cloud-driven organization goes beyond the old infrastructure and has several phases. As banks seek to harness the innovative potential of cloud technology, they take risk management and organizational structure into account.

Rafael has this time invited a real expert in the field of Cloud Banking to join the podcast. Together with Julian AdornerSenior Policy Advisor of the European Banking Federation (EBF), they talk about where we stand in cloud banking, what are the real stumbling blocks and of course the most important question of all – are we going to harmonize the regulation of cloud banking?

Cloud banking and its regulatory requirements

The EBF Cloud Banking Forum is a unique attempt to create a dialogue between the competent authorities, Cloud Service Providers (CSPs) and banks to facilitate the creation of a harmonised supervisory approach to cloud computing and to support the rapid adoption of public/hybrid cloud solutions in the banking sector.

In initial workflows, the EBF Cloud Banking Forum produced three technical papers reflecting important aspects for the introduction of cloud computing by European banks. By supporting a harmonised regulatory framework by stimulating voluntary best practices and providing a pedagogical background, cloud service providers and European banks seek to avoid a detrimental fragmentation of cloud computing in the EU.

Cloud banking and its regulatory requirements

To this end, the papers reflect the specificities of cloud use by financial institutions and address the requirements of the EBA guidelines on outsourcing from a cloud-specific perspective.

A real deep dive podcast for all of you who love technology. This time in English language!

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