Regulators Clear “Fog” Around Cloud-Based Financial Data
The risk that the cloud presents to the financial system has made regulators nervous.
This is what Gillian Tett wrote in an opinion piece for the Financial Times (FT) on Thursday, June 15. In May, the U.S. Treasury released a study that said 90% of the members of the American Banking Association are moving their work to the cloud.
The use of the cloud is expected to triple in the next three years, and a study from the FT says that regulators are not ready for this kind of growth.
“They have always struggled to track information technology, since they have historically hired economists, not techies,” Tett wrote. “But when finance companies were running their own IT operations, regulators did at least have a mandate to watch them.”
The White House “shows little stomach” to fight against putting tech giants like Amazon and Google under the control of central banks and other regulators, the story said.
The Treasury report said: “[D]ue to the different legal authorities for each agency, no single agency can see across the many use cases and the network of dependencies on cloud services within the financial sector.”
“In plain English: this is a fog,” Tettt wrote.
Even though the problem is complicated, Tett came to the conclusion that, if nothing else, it shows that artificial intelligence (AI) isn’t the only important tech topic right now.
Dave Scola, U.S. CEO for Form3, said in April that banks are turning to the cloud because they have realized the limits of their longtime proprietary solutions, which were enough to handle payment tasks until recently.
“But now bank clients are demanding more flexibility and higher levels of services,” Scola said at the time. “The banks want to address those demands but are now looking at the hulking dinosaurs of their legacy platforms and trying to figure out how they can accommodate those demands.”
He said that acquirers will have to use the cloud if they want to stay competitive, give users the best payment experience possible, and cut costs at the same time.
