Regulators, technology providers and experts analyzed the role of cloud computing in the development and consolidation of digital banking during the Latin American Regulators seminar organized by BBVA Bancomer and the IDB.
Without the cloud, progress cannot be achieved. This was one of the key messages that Hugo Nájera, Head of Business Development at BBVA Bancomer shared during the opening day of the regulatory seminar, held at BBVA Bancomer’s Innovation Center. Twenty-four hours later, experts, technology providers and regulators came to a similar conclusion: The cloud is the cornerstone of tomorrow’s financial services.
Participants in the “Bringing the cloud to financial services” panel didn’t hesitate to list some of the key of the advantages of cloud computing: (a) it democratizes access to technology, (b) it enables both consumers and banks to enjoy significant cost savings, c) it boosts the agility and scalability to the banking business, d) it improves the competitiveness of companies and specific economic sectors and, more importantly, e) it makes it possible to apply (to the banking business) other exponential technologies such as artificial intelligence and big data, technologies that significantly improve the value proposition so that customers can make better financial decisions.
The Mexico meeting offered a very rare opportunity to bring together Latin American regulatory authorities with two of the top cloud service providers, Google and Microsoft. Together with Amazon, they control 90% of the business worldwide. According to estimates by the Garner research company, 25% of the technology expenditure will be devoted to cloud services in 2019.
While regulators recognized the advantages of the cloud, they also expressed reservations with respect to the accumulation of risk. They pointed out that the chain of providers and the subcontracting of platforms make it hard to supervise these technological firms.
“We need regulations to be harmonized and greater collaboration between regulators and providers
For Google’s James Snow, part of the solution to this problem is to move towards a standardization of storage, access and other tasks that involve providers, financial entities and regulators. Being able to develop a single protocol with clear standards, controls and contracts, which can be applied to large and small companies. “We want to comply with regulation, but we want it to be easy,” he said.
Another weakness that affects cloud services is the widespread lack of understanding about what they really entail. For this reason, providers such as Google or Microsoft point to two basic elements to address this concern: education and information. As providers, “we need to educate our customers and regulators to make them more comfortable with cloud computing services, and in that process it is very important for regulators to update their outsourcing guidelines so that they are able to reassure customers,” said Dave Badoun, a Microsoft representative.
Both Badoun and Snow called for the harmonization of regulations, underscoring that in “a global world, it is very difficult to migrate to the cloud and adopt its innovation when there are different regulations across different jurisdictions.” The key, they said, is to combine control with agility and harmonize regulation to help consolidate it.