AFME and Protiviti have published a new report entitled “State of Cloud Adoption in Europe - Preparing the path for cloud as a critical third-party solution”, outlining four key barriers holding back the pace of cloud adoption within the financial services sector. The report finds that while cloud can clearly be an enabler for financial services innovation, some key barriers are currently making it harder for firms to adopt and fully leverage its potential.
The paper sets out four key challenges that financial institutions are currently experiencing, including:
- Concentration of Cloud Services
Globally, 65% of Cloud services are provided by just three entities, whose dominance is raising concerns among financial regulators, highlighting the risk of concentration in the Cloud marketplace.
- Regulatory Complexity
Regulatory fragmentation, uncertainty and the time required for regulatory approvals is preventing financial institutions from innovating, slowing the pace of Cloud adoption. FIs are also subject to multiple different regulators that may ask for the same information in different formats and through different channels.
- Data Localisation
The forthcoming EUCS certification framework could have far-reaching negative implications if the proposals to achieve “immunity against third-country law” via EU control requirements are adopted.
- Management of Disruption in the Cloud
Several high-profile Cloud service outages have highlighted the need for greater visibility and confidence in Cloud providers’ abilities to predict, manage and communicate disruptions to their Cloud services. Regulators expect FIs to have primary responsibility for resisting threats to operational resilience, to guard against service disruptions and to recover from incidents.
The paper provides nine recommendations for policy makers in order to help address these challenges.