Using the cloud can be a viable strategy for banks to reduce the complexity of their IT operations, which would be a welcome development. But it also introduces new risks and new challenges, including preparing IT systems for use in a cloud environment.
There is no doubt that cloud outsourcing offers opportunities to scale operations efficiently, reduce costs and enhance flexibility by leveraging cloud providers’ advanced infrastructure and services. Indeed, using the cloud can be a viable strategy for banks to reduce the complexity of their IT operations, which would be a welcome development. But it also introduces new risks and new challenges, including preparing IT systems for use in a cloud environment.
In particular, it presents risks related to IT and data security and vendor lock-in which, if not properly managed, could lead to operational vulnerabilities and business disruptions.
I would like to make three main points in my speech today.
First, cloud outsourcing is rapidly transforming the banking sector, with a significant rise in adoption and expenditure. But it also increases banks’ risk exposure, which demands heightened responsibility and robust governance frameworks.
Second, when adopting cloud strategies, banks should retain full accountability for outsourced services, ensuring clear roles, rigorous risk management and appropriate IT security measures.
Third, our supervisory expectations should not be seen as regulatory hurdles, but as strategic enablers to enhance resilience, operational continuity and data protection in banks’ cloud strategies.
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