Banks and other regulated financial institutions are becoming increasingly reliant on the cloud – using it to drive IT infrastructure ownership and maintenance costs down, improve business agility, rapidly scale computing capabilities, meet evolving business demands and customer needs and innovate at a higher pace.

As more and more data, functionalities and systems move to the cloud, financial regulators on both sides of the Atlantic have turned their attention and are now taking a much keener interest to the use of cloud solutions by banks and other regulated financial institutions. The fresh scrutiny comes as concerns mount among market participants over the continuing regulatory uncertainty and inconsistency of oversight being taken by regulators with regard to the cloud. To address these concerns, the European Banking Authority (EBA) in Europe and the Financial Conduct Authority (FCA) in the United Kingdom have recently issued new recommendations and guidelines for cloud outsourcing; while the U.S. Department of the Treasury has recently released a report identifying improvements to the cloud regulatory landscape in the United States.

As financial regulators develop clearer and more uniform guidance for the cloud, the need for effective dialogue among various stakeholders will also increase. Key to a successful cloud adoption in financial services will be a tight cooperation among regulators, financial institutions and cloud providers to ensure that the right frameworks, programs and processes for the cloud are developed and implemented, which will offer increased security while encouraging further innovation.