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USING CLOUD TO ACHIEVE FINANCIAL SERVICES COMPLIANCE

Edward Grant, CFO & Co Founder at Solgari

The financial services industry is required to comply with a vast array of complex national and international regulatory requirements. While these regulations aim to maintain the integrity and security of the financial system, it’s often been the case that the industry has held back from taking full advantage of the cloud, with compliance often amongst the top concerns. However, over the years, cloud providers have continued to strengthen their auditing and data protection controls, resulting in cloud adoption becoming much more prevalent throughout the financial sector.

As a reflection of how much industry attitudes have changed, regulatory agencies and bodies now recognise the value and popularity of cloud services and, in some cases, actively endorse them. In November 2015, the Financial Conduct Authority (FCA) stated that there are “no reasons why cloud technology should not be implemented should appropriate safeguards be in place”. This statement has given financial services companies – both public and private – greater confidence to take advantage of cloud services. The use of cloud technology, according to the FCA, “can facilitate entry and/or expansion, and increase the ability of financial services providers, overall, to renew their IT systems in a more efficient manner.”

Cloud compliance

Cloud technologies can be utilised in many areas, but a big one for the financial sector is communications, more specifically cloud telephony/contact centres. Stringent regulations implemented after the financial crash of 2007 include requirements from the FCA, Central Bank and MiFID, and all aim to improve communications and increase transparency in order to mitigate future risk. Indeed, FCA requirements already state that anyone involved in equity trading has to have their mobile calls recorded. MiFID II, which is due to come into effect in 2017, will expand this mandate to anyone involved in the trading process, including those providing trading advice. These calls will then need to be archived for five years. The need for efficient, secure call archiving and recording has never been more substantial.

In order to guarantee compliance, it’s no surprise that many financial services companies are already addressing their technology infrastructure to meet these new or pending requirements. Indeed, cloud technology, which was once rejected by the industry outright, may actually hold the key to reducing regulatory risk. Used correctly, it can reduce exposure and provide quick reassurance that trades, and communications around trades, are compliant. In addition, it has the potential to make financial services more efficient, encourages innovation and improves accountability.

Utilising cloud telephony

With regards to communications, cloud telephony not only guarantees seamless communications and flexibility to only archive calls by relevant users, it also enables businesses to search and retrieve these archived calls within seconds. Features include the ability to word spot within the archived calls if the company is looking for a particular issue or trend among the conversations. Cloud telephony solutions also archive the relevant calls securely in encrypted environments, reducing any security risk and avoiding investment in expensive, less functional, on-premise archiving systems. This ensures businesses are safe in the knowledge that they can meet new and existing compliance regulations, while maintaining the confidentiality, integrity and availability of their financial services data.

The financial industry is increasingly leveraging cloud telephony solutions to meet Central Bank, PCI DSS and FCA compliance requirements. Indeed, many financial organisations are beginning to realise that switching to cloud telephony solutions ensures that companies are fully compliant with industry regulations.

Furthermore, with cloud technology, businesses can reduce communications costs by at least 30 percent and streamline their operations. The costs savings from using integrated cloud call archiving software versus the usual on-premise hardware based call recording systems will be dramatic, especially with advent of MiFID II. Meeting these requirements on a fixed per user per month model is far more efficient. Expanding technology has become easier and cheaper. Whereas before it took a business several weeks and thousands of pounds to set up a new physical server, it now takes less time and money to do the same thing in the cloud, making financial services companies much more inclined to adopt cloud technology.

Ultimately, the cloud is becoming one of the safest, most cost-effective and efficient way of managing communications in the financial services sector. It ensures financial services companies are retaining the right data at the right time and protected in the right way so that it can be accessed for compliance reasons very quickly in a cost effective way, without endangering the security of the data itself.