By Jacqueline Guichelaar

The financial services industry is no stranger to the constant need to adapt and change. Today’s ever-changing landscape of technology and regulation means that staying still is simply not an option.

Jacqui Guichelaar
Jacqui Guichelaar

Sometimes, however, there comes a new idea or technological advance that jolts the entire sector into action.

In my view, the most recent of these seismic changes in the way financial companies operate has been the emergence of cloud technology. The benefits of the cloud have, over the past few years, led the financial sector to begin completely reinventing how it operates.

For me, the most important thing about the emergence of the cloud is that financial services organisations are not constrained as they were in the past and can utilise compliant technology, on-demand, in the cloud, which allows them to invent new ways to bring value to their customers.

In all the excitement over the potential of the cloud, I have noticed that the focus has naturally turned to exciting FinTech start-ups, which harness cloud technologies to focus on creating customer-focused businesses based around convenience and personalisation.

For a time, concerns around compliance issues led banks to give cloud computing a wide berth. However, now the technology has matured and developed high levels of security, privacy and control, it is my view that the cloud is becoming more difficult to ignore.  Cloud providers are now investing in more security policing and counter-measures than almost any company can afford themselves.

Therefore, I believe that it is no surprise that financial regulators are now sitting up and taking serious notice of cloud software. The key to good regulation, in my experience, is to encourage the growth of innovation while safeguarding the industry from unnecessary risk.

Traditionally, financial companies have been forced to compromise their ability to innovate and grow to satisfy the demands of regulators. I have known companies to have complex data centres which cost a small fortune to run and to keep secure in order to ensure the safety of customer data.

Now, it seems, regulators are already beginning to recognise that businesses need to be more agile and use the cloud to make changes quickly and without disruption – and see the cloud as the ideal way to allow this to happen securely.

Earlier this year, the Financial Conduct Authority opened its new regulatory “sand box”- Project Innovate – to allow financial companies to test new products, business models and delivery mechanisms in a safe space.

This way, any bank, financial institution or startup considering using cloud technology can ensure that their business model is compliant with regulations.

With the right safeguards in place, I think that banks, insurers and other financial services companies are now in a fantastic position to take advantage of cloud computing services.

Taking the lead in this field are financial companies such as Capital One, which has been gradually reducing the number of data centres it operates, from eight in 2014 to a target of just three by 2018, by utilising cloud storage technology.

The security offered by today’s cloud providers means that the aims of regulators and financial companies are now very closely aligned. It very much strikes me as a positive balance between stimulating financial enterprise and competitive advantage with security and compliance.

I have noticed that a perception still lingers that the cloud comes with a compromise on security and that there is some element of risk in migrating to the cloud. However, the direction of travel is towards a more wider use of cloud-based financial products.

Slowly but surely, I believe that the banks and large financial companies will realise the efficiencies they can achieve and benefits they can offer to their customers by migrating to the cloud, making life easier for banks, customers and regulators.


  1. Very nicely put. You have succinctly described the bedrock for 3 things I am seeing play out (on top or alongside the cloud acceptance) in the industry.

    #1 Race for the run-times. Software, mostly cloud based, that enables connected market places, connected business processes, connected things, connected organisations, connected applications and connected data sources (the areas of future wealth), all of which complimented by connected analytics for decision making, planning and partnerships;

    #2 Virtualisation wars. Above the classical levels of abstractions that enable the policy driven (semantic) IT organisations to merge;

    #3 The coolest of cool developer tools. Those which enable developers to bring distinguished and differentiated applications to companies and their customers, at a pace never witnessed in the history of mankind to date. Again, largely cloud based for which #1 and #2 are pre-requisites.

    It is interesting to note that it has only taken 50 years (since Douglas Parkhill published his seminal work on the “computer utility” in 1965, which in today’s parlance we call “cloud”) to get to the level of acceptance you note in your article. I don’t belive that the world is waiting that long for #1, #2 and #3. I already see forward looking FSI companies evaluating and executing on #1, #2 and #3.

    However, good luck and good fortitude for your activities at Lloyds.

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