Earlier this month, the Financial Conduct Authority (FCA) published new guidelines on how financial service firms should operate, and ultimately take advantage, of cloud computing services. Laying out guidance in this fifteen-page consultation document, the FCA has effectively approved the use of cloud services, provided the “appropriate safeguards” are put in place to protect corporate and personal assets.
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As part of its newly-published guidelines on cloud and other forms of IT outsourcing, the FCA are quoted as saying they that see “no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our [the FCA’s] rules.”
The FCA’s latest show of support for cloud-computing comes amid speculation that investment in cloud technology will reach $131 billion by 2017 — a figure that’s sure to spur some industries and sectors into adopting the technology sooner rather than later.
But what does the FCA’s new stance on cloud-computing mean for individual businesses, firms and organisations within the financial sector? John Salmon, head of financial services at Pinsent Masons and founder of financial news site, Out-Law.com, believes the FCA’s decision to implement cloud-computing presents a significant leap forward for businesses in the financial sector. He said:
“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.”
For businesses who choose to implement cloud-technology, the FCA has predicted that deploying such technologies will serve to improve competition in the financial marketplace — helping small and medium-sized firms compete on a more level playing field with larger, more-established organisations. By outsourcing their IT services, finance companies will enjoy greater flexibility and efficiency in the market, something which could prove lucrative for the firms and their customers.
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However, as with the integration of any new technology into a long-established marketplace, there are elements of risk which financial service companies will have to assess, mitigate and manage effectively if they’re to succeed in the proficient deployment of cloud-services.
By outsourcing their IT services to the cloud, finance businesses need to be aware of the potential security pitfalls involved in hosting sensitive data in a network with variable levels of security control. For this reason, data protection should be at the forefront of their cyber-security mandate, and the appropriate measures should be put in place to guarantee the safety of data and information.
Security concerns shouldn’t deter finance businesses from implementing cloud-technologies, however. Once the recommended security measures are put in place, cloud computing can streamline processes, enable increased regulation and improve business continuity — effectively helping businesses better tailor the services they provide.