FINANCIAL REGULATORS ARE CONCERNED ABOUT BANKS HANDLING SENSITIVE INFORMATION IN THE CLOUD

Financial regulators in both Europe and the US have raised concerns over the supervision of online storage services, like the cloud, that hold sensitive data from the world's biggest banks. Cloud technologies are being used to store customer account data, as well as core banking systems, making financial institutions (FIs) increasingly reliant on the technology.

BI Intelligence

The main concern from regulators lies in what could happen if the cloud services were to be disrupted. Additionally, they say, Amazon, Google, and Microsoft — which dominate the cloud space — have too much information in their hands, yet don't have to comply with the same stringent regulations as banks do.

Regulators are planning to test how well banks would stand up to cloud disruption. The Bank of England, for example, is considering testing the resilience of banks to analyze the effects of the cloud being disrupted. It is also looking to publish more insight into the matter in the future, with an eye toward possibly introducing new regulations.

Meanwhile, the US Office of the Comptroller of the Currency is reviewing the relationship between banks and third parties, such as cloud providers. Likewise, EU regulators are in talks with tech companies to evaluate their agreements with banks. These efforts are designed to determine to what extent banks can move off the cloud if any disruptions were to happen.

Keeping an eye on the use of cloud infrastructure is likely a good approach from regulators. The more banks rely on the use of the cloud, the riskier their implementation becomes. Hence, it is likely a good idea to monitor the use of and reliance on the technology in the financial sector, in order to ensure the industry's stability would not be in danger if the cloud was to be disrupted, via a hack, for example.

Banks should put their efforts into making sure that they have a back up plan ready, not only to make regulators happy, but also to keep the assets and personal details of their customers safe.

Cloud computing — on-demand, internet-based computing services — has been successfully applied to many computing functions in recent years. From consumer-facing, web-based productivity apps like Google Docs to enterprise database management suites, the tools businesses rely on are increasingly moving to the cloud.

But developing a cloud strategy is no easy task. Public cloud solutions will likely come to dominate the market over the next decade, but business constraints, such as security concerns and the limitations of existing infrastructure, make it difficult for companies to fully adopt the public cloud right now.

That means that hybrid clouds, in which multiple cloud implementations (including public and private) are connected, will remain popular for the time being, at least until these constraints are addressed. The tech giants that dominate the IaaS market — Amazon, IBM, Microsoft, and Google — are constantly expanding their offerings to address current business constraints as they compete for market share.

Business Insider Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that:

Explains the different cloud computing strategies and benefits of cloud computing.

Evaluates key business considerations - security needs, demand predictability, existing infrastructure, and maintenance capabilities - for enterprises choosing between cloud implementations.

Provides and outlook for trends and major players in the cloud computing market.