Regulators, service providers, consulting firms and banks leading the transformation process participated in a workshop organized by the European Digital Forum to analyze how to increase the competitiveness of the European economy and drive innovation through ‘cloud computing.’
In the second high-level round table on ‘Financial Services in the Digital Era’, held in Brussels, representatives of the European Commission (EC) singled out cloud computing as a “pivotal technology for EU competitiveness” and to make headway in the Digital Single Market strategy.
The debate underpinned the potential and challenges of cloud computing in financial services, and was joined by experts from cloud service providers (Google, AWS), leading banks in cloud migration (ING, Société Générale, KBC and BBVA) and consulting firms (Accenture).
Oscar Pinto, co-leader of BBVA’s Cloud Project in Engineering, underscored the advantages of cloud technology for a bank with the size and geographical reach of BBVA. Pinto offered some real-life examples to illustrate the benefits of this technology in terms of productivity, scalability, the capability to innovate and develop new business models, mitigate technological risks and boost cost and investment efficiency.
One of the key advantages that cloud computing offers is scalability. Pokémon Go’s example is highly illustrative: The app’s instant success when it first launched meant that its platform had to cope with 50 times the workload it had been designed for, an issue that was quickly solved thanks to its cloud-based architecture.
The debate was also a good opportunity for banks and technology providers to present their recommendations before EU regulators, including the need for a cultural change – from analogic to digital – among authorities and supervisors so they can better understand the implications of cloud computing and adjust the regulatory frame.
5 regulatory proposals
Brit Hecht, Senior Policy adviser in Digital Regulation BBVA's GERPA unit, set out the components of a robust regulatory framework for an efficient and safe use of cloud-based financial services.
- Level playing field: defining a space to compete in equal terms not only in the UE, but globally, applicable both to financial and non-financial industries; harmonizing criteria as much as possible.
- Elimination of restrictions to the free flow of data within the EU and also with other geographies with bilateral or multilateral trade agreements.
- A regulatory framework that takes into account the risks of the different activities (risk-based approach);
- Clarification of the new data management standards (GDPR; breach reporting, etc.,) within the context of the cloud.
- Singularly, and more important in the short-term for a swift adoption of cloud technologies: a regulation for the outsourcing of services, establishing clear ex-ante criteria for the collaboration between cloud service providers and user banks (instead of cumbersome authorization procedures on a per case, per service, per country basis).