Cloud computing providers could become a threat to financial stability and regulators need to crackdown on them to strengthen banks’ resiliency, the Bank of England warned on Tuesday.
The Bank said some cloud computing providers can be secretive and could disrupt the normal functioning of the UK financial system.
The concerns have been triggered by banks and other financial firms outsourcing work to cloud computing companies such as Amazon, Microsoft and Google to capture efficiency gains and reduce costs. The pandemic accelerated this trend as banks looked to protect their balance sheets from the economic of shock of Covid.
Andrew Bailey told a news conference that “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.”
Earlier today, the Bank’s Financial Policy Committee urged additional policy measures needed to be implemented to prevent financial instability risks arising from cloud computing.
A Google spokesperson said: “We’re committed to working with financial services customers and regulators to provide them with controls and assurances on risk management, data locality, transparency, and compliance.”
Bailey recognised that cloud computing providers may not want to provide too much information on their backend operation in case it left them exposed to cyber-attacked.
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