Data centres
a ‘secure umbrella’ before any migration could begin. The bank also had to contend with the risk of placing everything with one provider, in one place.
“Data security and data protection have always been crucial for financial services, they are businesses built around trust,” Brune says, adding there are very few other industries where data is so important. As crucial as it is to gain trust among clients, banks and financial service providers also have to be trusted by regulators, meaning compliance isn’t optional – it’s a must.
One of the biggest challenges facing older banks are legacy systems and their limitations when incorporated into modern systems.
Its culture is another charm: European of course, but interwoven with that of its South American cousins. Professor Dr Philipp Brune of the University of Applied Science Neu-Ulm in Germany tells Future Banking that it’s fast becoming the “nearshoring location” of choice for IT services. “For many European companies,” he says, “it is attractive.”
“Data security and data protection have always been crucial for financial services, they are businesses built around trust.”
The figures certainly agree: the Spanish cloud market is growing at a staggering pace. Analysis by Research and Markets suggests the country’s data centre industry will enjoy annual growth of up to 5.4% to 2026, generating investment in subsectors such as 5G and artificial intelligence. Spain currently has at least 35 data centres, with a further nine planned for the coming years.
€613bn
In 2020, the Spanish government announced investment into AI technologies to support its burgeoning data centre industry.
Spanish government 54
The cloud appeal Spain’s Santander is carefully manoeuvring its way through a multibillion-euro digital transformation project to modernise its legacy systems. The €20bn programme, which includes the recruitment of thousands of engineers, involves Amazon and Microsoft, and a mix of public and private cloud technologies. The bank believes it will ultimately position it to compete with fintechs and challenger banks. It aims to have largely completed the project by 2023.
So, why are Santander’s ambitions not shared by all in financial services? By the banks own admission, the challenge hasn’t been an easy one. It says security was key, engineering what it called
Regulators take more than a dim view on data breaches. That’s particularly true in the EU, where fines of up to €20m, or 4% of a company’s annual global turnover, can be imposed. In addition, individual countries within the bloc are also free to levy financial penalties. The US too takes a robust stance; in 2020, credit card provider Capital One was hit with an $80m fine for a breach, which saw more than 100 million customers’ personal data exposed as the company migrated to the cloud. As the Office of the Comptroller of the Currency (OCC) put it: “While the OCC encourages responsible innovation in all banks it supervises, sound risk management and internal controls are critical to ensuring bank operations remain safe and sound, and adequately protect their customers.” It’s a view Brune shares, suggesting that the best data security can be achieved by employing the right techniques. “For banks, it’s important which techniques are used in a data centre to minimise risk and avoid or contain, say, malicious attacks from outside harming other systems. Banks must be able to document these things to show they have taken all the necessary measures to protect systems.” Of course, none of this is only true for cloud data storage: it’s true for so-called ‘on-premises’ operations too. Nor are these on-premises centres – physical data centres owned and operated by a company – a new concept for banks. They’ve been using this type of approach for decades, with many continuing to do so even now. To put it another way, not all banks are as attracted to migration on a large scale as Santander. But will it get to a time when the sector is fully migrated?
One way or the other Word from Santander would suggest that’s a possibility. Speaking in an interview earlier this year, Dirk Marzluf, the bank’s global chief operating and technology officer, said 60% of its overall IT infrastructure had been migrated, with the remaining 40% likely to be the hardest. He did, however, hint that this was still the target.
If the Spanish giant achieves its aim, Brune feels it will be the exception rather than the rule. “I would say it’s not one or the other, it’s not either/or. I think
Future Banking /
www.nsbanking.com
Ton Snoei/
Shutterstock.com
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