UK FCA Approves Use of Cloud Technology at Financial Services Firms
For firms looking for guidance about how regulatory agencies apply outsourcing rules to cloud services, recent guidelines issued by the UK Financial Conduct Authority (FCA) offer support for the use of public cloud technology at financial services firms.
In a set of new guidelines released in July, the FCA recognized the need to provide more detail on their approach to financial services firms using a cloud services provider. The guidelines go on to provide a positive endorsement of cloud technology, stating: “We see no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules.”
The new guidelines support the FCA’s effort to foster innovation in order to promote competition in the financial services sector. They state in the report, “Using the cloud can provide more flexibility to the services firms receive, enabling innovation, and bringing benefits to firms, consumers, and the wider market.”
These cloud-friendly guidelines demonstrate a changing attitude towards the cloud in the financial services industry, as discussed recently at our panel, Fintech and the Cloud. Third party cloud providers offer financial firms a number of benefits such as cost savings, increased security, and often, built-in compliance.
Regarding security, the FCA went on to advise firms considering a third party cloud service to agree on a data residency policy with their provider upon beginning their relationship. Building this trusting relationship between firm and provider is key to implementing a secure and effective cloud solution.
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