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The Finance sector’s relationship with its Cloud providers is evolving


For some years now, Cloud adoption has been steadily on the rise across the UK's Finance sector, with organisations including banks, insurers, and investment firms phasing out increasingly cumbersome legacy systems in favour of more scalable, agile, and cost-effective infrastructure. Indeed, more than 48% of UK banking services are now built on Cloud infrastructure.

However, in light of recent well-publicised outages - such as AWS in 2021 - many leaders within the sector have questioned whether they have become overly reliant on a small number of Cloud providers, and whether this will negatively impact their overall operational resilience. As a result of these concerns, the Bank of England's Prudential Regulation Authority (PRA) is in the process of putting Cloud providers under closer scrutiny, particularly regarding their ability to respond to outages and cyber-attacks. At the same time, the BoE, HM Treasury, and FCA have published comprehensive guidelines to help firms optimise their own operational resilience, including formal targets for impact tolerances.

Furthermore, heightened geopolitical tensions in recent months have highlighted the need for organisations - particularly those that routinely handle sensitive data - to ensure they are always fully prepared for a worst-case scenario. In 2020 alone, the Finance sector experienced a 200% rise in cyber-attacks - a figure that will only increase in the months ahead as global bad actors target key institutions worldwide. As we have noted several times on this blog, organisations must treat successful ransomware attacks as a certainty, and plan accordingly, putting measures in place to ensure critical data can be swiftly restored and secured in the event it is compromised.

Taking all these factors into account, it would not be unreasonable to assume that the pace of Cloud adoption across the Finance sector will slow down, but this needn't be the case. If Cloud providers work closely with financial institutions, current efforts to optimise the sector's overall resilience and ability to withstand the most aggressive cyber-attacks will usher in a new Cloud model - one that not only meets Finance professionals' performance requirements in the era of hybrid working, but delivers a standard of operational resilience that ensures firms will be able to withstand even the most serious disruptions.

Although the Cloud market is currently dominated by a small number of 'big players', this is the ideal time for smaller - and arguably more agile - providers to engage with the Finance sector. The outages discussed above have shown that no provider is 'too big to fail', but adopting a vendor-agnostic approach, and working closely with up-and-coming Cloud innovators will lessen the sector's dependence on the large-scale providers and allow firms to access a wider pool of expertise - all while limiting the impact of any outages at individual suppliers.

With this in mind, Finance firms should adopt an open mind when considering potential Cloud providers, and consider the following key factors during the evaluation process:

  • Are they able and willing to engage with other providers in order to deliver fully integrated solutions, ideally monitored through a single pane of glass?
  • Can they demonstrate a deep understanding of the Finance sector's singular data security and compliance requirements, and a track record of successful projects within the sector?
  • Do they provide proactive support and guidance around the fulfilment of FCA guidelines around impact tolerance?
  • Are they able to meet firms' and clients' requirements around data sovereignty - a critical part of the Finance sector's compliance obligations that must be factored into any Cloud transformation project?

If you would like to explore the transformative effects of Cloud adoption in the Finance sector, and develop an infrastructure that helps your firm meet all guidelines around impact tolerance and operational resilience, do not hesitate to contact our team.

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