The bank of England said that the cloud computing providers to the financial sector can be secretive, and regulators need to act to avoid banks’ reliance on a handful of outside firms becoming a threat to financial stability.
Banks and other financial firms are outsourcing key services to cloud computing companies such as Amazon, Microsoft and Google to improve efficiency and cut costs. The BoE said cloud computing could sometimes be more reliable than banks hosting all their servers themselves. BoE Governor Andrew Bailey told a news conference that the concentrated power on terms can manifest itself in the form of secrecy, opacity, not providing customers with the sort of information they need to monitor the risk in the service. And they have seen some of that going on. Bailey did not name specific firms he had concerns about.
The BoE’s Financial Policy Committee said that the additional policy measures were needed to mitigate financial stability risks in cloud computing. Bailey said in terms of the standards of resilience and the testing of those standards of resilience, frankly they will have to roll some of that back, that secrecy goes with it. The BoE understood cloud providers’ desire not to reveal too much publicly about their operations. Google Cloud said cloud’s benefits had come into full view during the pandemic. A Google cloud spokesperson said that they are committed to working with financial services customers and regulators to provide them with controls and assurances on risk management, data locality, transparency, and compliance. The BoE welcomed the engagement of the finance ministry and Financial Conduct Authority on how to tackle risks from cloud computing.