It has been reported that the UK’s Financial Conduct Authority (FCA) has begun paving the way for financial institutions to take advantage of cloud computing services. There has been a lot of concern regarding the use of such technology, with insurers, banks and other financial organisations needing to ensure data is kept extremely safe; now, the FCA has stated in its latest proposed guidance report that there is no reason cloud technology cannot be used, as long as appropriate consideration of data rules is maintained.
Pinsent Masons’ financial services and technology law expert, John Salmon, stated: “It is really positive for the FCA to recognise that the financial services sector can move ahead with plans to use cloud services, as long as appropriate safeguards are put in place. This is consistent with the regulator's efforts to promote innovation in the sector and should help more firms benefit from cloud solutions.”
One of the reasons cloud outsourcing is being championed is the fact it can provide increased competition for the financial services industry, which is something the FCA is keen to promote. Smaller businesses can more easily enter the market and expand with access to cloud technology, enabling customers to have more choice as a result; however, the FCA was keen to stress there are still risks that companies need to understand and manage when outsourcing to the cloud. There may not be control over where data is stored, for example, and sub-contracting arrangements can often exist without companies initially realising such agreements are in place.
The FCA outlined various considerations for firms thinking about utilising the cloud, including matters of regulation, data protection, business continuity, security, risk management, and how to ensure data can be accessed by regulators.
Speaking on the subject, Mr Salmon said: “It is good to see the FCA acknowledge that cloud services, while similar to traditional outsourcing arrangements, are unique in many respects. Leaving to one side some of the regulatory issues which remain to be debated through the consultation period, what the FCA has provided should provide firms with a good roadmap to implement cloud strategies that are effective in matching compliance rules written for traditional outsourcing arrangements to the cloud context.”
Using the cloud can offer huge benefits for many firms, both in terms of saving time and money. Accessing cloud computing can also make business processes more flexible and facilitates growth and collaboration. With the right care, financial institutions could soon be using the cloud and giving customers better service than ever.
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