Bank of England to crack down on ‘secret’ cloud services, Telecom News, ET Telecom

By Huw Jones and David Milliken

LONDON: Cloud providers to the financial sector may be ‘undercover’, and regulators must act to prevent banks’ dependence on a handful of outside companies from becoming a threat to financial stability, the Bank of England said on Tuesday.

Banks and other financial firms are outsourcing key services to cloud companies such as Amazon, Microsoft and Google to improve efficiency and reduce costs, with the trend accelerating last year as the market unfolds. COVID-19 pandemic.

The BoE said cloud computing can sometimes be more reliable than banks hosting all of their servers themselves. But large suppliers could dictate terms and conditions – as well as prices – to major financial firms.

“This condition-focused power can manifest itself in the form of secrecy, opacity, not providing clients with the kind of information they need to monitor risk in the service,” said BoE governor , Andrew Bailey, at a press conference. “We have seen some of this happen.”

Bailey did not name specific companies he had concerns about.

Earlier, the BoE’s financial policy committee said additional policy measures were needed to mitigate financial stability risks in cloud computing.

“In terms of resilience standards and testing those resilience standards, we’re going to have to go back frankly, the secret that goes with that. It’s not consistent with our goals,” Bailey said.

Bailey said the BoE understands the desire of cloud providers not to publicly reveal too much of their operations, in case that opens the door to cyber attacks, but that companies need to give more information to regulators and customers.

“We have to find a balance here,” Bailey said.

Google Cloud said the benefits of the cloud had become visible during the pandemic, and welcomed the continued discussions with policymakers on the areas raised by the BoE.

“We are committed to working with financial services clients and regulators to provide them with controls and assurances on risk management, data localization, transparency and compliance,” said a Google Cloud spokesperson. .

Amazon and Microsoft did not immediately comment.

The BoE said it welcomes the commitment of the Ministry of Finance and the Financial Conduct Authority on how to tackle the risks of cloud computing, but that a broader approach may be needed, including ‘other regulators and foreign partners.