Governance, risk & compliance
shifting its High Performance Computing Cluster (HPCC), a global back-end application, to the cloud. The bank has elected to use a pay-as-you-go model, which enables cost to change in accordance with variations in daily workload and the modular nature of tasks, which can be switched on and off to save on computing power. Not unrelatedly, UniCredit has chosen to use public cloud architecture rather than its own private cloud infrastructure to leverage the scale and expertise of a large-scale provider.
“The use of this platform for risk analysis has skyrocketed over the last ten years,” Tonella explains. “We needed to increase the computational capacity of our infrastructure and started IT analysis in 2018 to identify possible solutions. Moving HPCC to the cloud guarantees flexibility and scalability in real time of our computational capacity and helps manage any peaks in usage.”
“Public cloud technology enables users to take advantage of ‘on-demand’ infrastructure and service solutions on a pay-per-use basis, without having to invest in computing capacity or a data centre infrastructure,” he adds.
A similar pattern is emerging at ING, which uses a private cloud architecture for most of its core banking applications, and is mixing private and public cloud services to offer its customers better, faster and more personalised experiences. Its choice of private cloud for its core systems means the bank retains control over the location and management of its most crucial data – though it remains open to using public cloud architecture for the development of additional products and services in future. “ING is an early adopter of cloud technology and sees it as an important element in its digital transformation,” says Beate Zwijnenberg, ING’s global CISO. “In an increasingly digitalised world we look towards balancing security with flexibility in all areas of our business. The benefits of having cloud within the financial services industry as a whole cannot be highlighted enough. First of all, there is the reduced time-to-market, as it provides a growing and readily available set of services we can use. Secondly, there is the accelerated time-to-volume – with public cloud regions spread across the globe, it becomes easier to scale our platforms and services.” As a concept, then, cloud services offer unprecedented benefits – but there are risks with the execution of any cloud strategy in practice. First, all the major cloud services providers are Big Tech companies based overseas – Amazon, Google, Microsoft – and must meet Europe’s stringent regulatory requirements for security and privacy. Second, agreeing to technical specifications can be cumbersome and time-consuming. Fortunately, the industry has come together to meet these challenges head-on.
Future Banking /
www.nsbanking.com Forthright and focused
For UniCredit, ING and a host of other European financial institutions, the wider adoption of cloud services is littered with operational and regulatory challenges, each of which could derail their efforts to optimise the benefits of such a flexible systems architecture.
“European banks face the same challenges,” says David Zeller, Group CTO at Raiffeisen Bank, which is transitioning many parts of its IT infrastructure to the cloud. “On the one hand, cloud companies offer great technology to enable our business but, on the other side, security and regulations force banks to be cautious about cloud usage and outsourcing. Having a common voice towards cloud providers helps to build awareness and impact with the cloud providers for the specific needs of the finance industry.”
83%
Financial services respondents that stated the cloud is vital to their organisation’s future growth and success.
Harvard Business Review
“Having a common voice towards cloud providers helps to build awareness and impact with the cloud providers for the specific needs of the finance industry.”
David Zeller
“For all the benefits that cloud technology brings, it also brings its challenges,” agrees Zwijnenberg. “Regulatory requirements make it challenging to adopt public cloud services. Take, for example, the impact of legislation such as the Digital Operation Resilience Act (DORA) and rulings such as Schrems- II. Then there is the challenge of portability, as currently migration between cloud providers can be challenging and time-consuming. Lastly, public cloud adoption for financial institutions is challenging due to the specifics of cloud computing, as it is being regarded as outsourcing.” DORA, for its part, is the EU’s effort to streamline third-party risk management processes across financial institutions, with a view to improving cybersecurity and operational resilience. The ECUC’s Position Paper, which outlines its key goals and priorities, currently recommends clarifications to the scope and application of DORA, including an alignment with existing standards.
Schrems-II, meanwhile, is a ruling made by the Court of Justice of the European Union in mid-2020, which affects all transfers of personal data between EU member states and external markets with lower levels of data protection, particularly the US. The European Commission has since published a draft update of the standard contractual clauses to be used in personal-data-transfer situations to recipients outside the EU. Among other things, it carries the potential for large fines – 4% of worldwide revenue – for compliance breaches.
69% Harvard Business Review 47
Respondents that shared that more than half of their existing infrastructure and apps would move to the cloud in the next two years.
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