Connect with us

Banking

Bank of England to crack down on ‘secretive’ cloud computing services

Bank of England to crack down on 'secretive' cloud computing services 1

By Huw Jones and David Milliken

LONDON (Reuters) -Cloud computing providers to the financial sector can be “secretive”, and regulators need to act to avoid banks’ reliance on a handful of outside firms becoming a threat to financial stability, the Bank of England said on Tuesday.

Banks and other financial firms are outsourcing key services to cloud computing companies such as Amazon, Microsoft and Google to improve efficiency and cut costs, with the trend accelerating last year as the COVID-19 pandemic unfolded.

The BoE said cloud computing could sometimes be more reliable than banks hosting all their servers themselves. But big providers could dictate terms and conditions – as well as prices – to key financial firms.

“That concentrated power on terms can manifest itself in the form of secrecy, opacity, not providing customers with the sort of information they need to monitor the risk in the service,” BoE Governor Andrew Bailey told a news conference. “We have seen some of that going on.”

Bailey did not name specific firms he had concerns about.

Earlier, the BoE’s Financial Policy Committee said additional policy measures were needed to mitigate financial stability risks in cloud computing.

“In terms of the standards of resilience and the testing of those standards of resilience, frankly we will have to roll some of that back, that secrecy that goes with it. It’s not consistent with our objectives,” Bailey said.

Bailey said the BoE understood cloud providers’ desire not to reveal too much publicly about their operations, in case it opened the door to cyber-attacks, but that the firms needed to give more information to regulators and customers.

“We have got to strike a balance here,” Bailey said.

Google Cloud said cloud’s benefits had come into full view during the pandemic, and it welcomed further discussion with policymakers on areas raised by the BoE.

“We’re committed to working with financial services customers and regulators to provide them with controls and assurances on risk management, data locality, transparency, and compliance,” a Google Cloud spokesperson said.

Amazon and Microsoft had no immediate comment.

The BoE said it welcomed the engagement of the finance ministry and Financial Conduct Authority on how to tackle risks from cloud computing, but that a broader approach may be needed, including other regulators and overseas partners.

(Additonal reporting by William SchombergEditing by Mark Potter)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Recommended

Newsletters with Secrets & Analysis. Subscribe Now