Cloud Outsourcing by Financial Institutions – 5 Key Areas

A recent European Banking Authority (EBA) consultation paper sets out draft recommendations for credit institutions and investment firms considering 'material' cloud outsourcing.  We review 5 key areas that feature in the recommendations.

The new recommendations supplement existing outsourcing requirements and detail the supervisory requirements, processes and expectations that apply when credit institutions and investment firms outsource to the cloud. They aim to achieve greater supervisory convergence and clarity on what is required when a financial institution wishes to adopt cloud computing and reduce the cost of complying with regulatory obligations in this area.

Notable changes in the new recommendations include the ability of financial institutions to participate in 'pooled audits' with other customers of the same cloud provider, potentially resulting in sizable cost savings. Other requirements place obligations on the financial institution to ensure