IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Keep off the cloud warns EU financial regulator

The EU Banking Authority said banks should be wary of vendor lock in and security when using the cloud

cloud management

The EU Banking Authority (EBA) has warned financial institutions moving to the cloud are risking their freedom by being locked into using particular vendor's service and being forced to onboard subcontractors from "high risk areas".

The EBAs report "on the prudential risks and opportunities arising for institutions from fintech" highlighted cloud servces as one of the seven key risks and opportunities to financial institutions, alongside other technologies such as blockchain and Big Data.

The report explained that businesses choosing to use the cloud are putting both their own organisations and others in the sector at risk because "large suppliers of cloud services could become a single point of failure should many institutions rely on them".

"Additionally, a possible impact on the wider operational risk could arise from issues with data security, systems and banking secrecy, especially when cloud services are hosted in jurisdictions subject to different laws and regulations from the institution," the report continued.

The EBA advises financial businesses only to use cloud technologies if security is not a primary concern and recommended businesses intent on using cloud services consider a private cloud set-up, rather than public cloud services.

"[Private cloud] allows the most flexibility in data processing and security. On the other hand, private clouds are typically less scalable and more expensive than public clouds," the report said.

It also warned against financial firms using subcontractors because it poses a risk to the institution. If a business cannot control the technological infrastructure used by a cloud provider, it could affect the ICT outsourcing risk of that business. 

Featured Resources

Accelerating AI modernisation with data infrastructure

Generate business value from your AI initiatives

Free Download

Recommendations for managing AI risks

Integrate your external AI tool findings into your broader security programs

Free Download

Modernise your legacy databases in the cloud

An introduction to cloud databases

Free Download

Powering through to innovation

IT agility drive digital transformation

Free Download

Most Popular

Salaries for the least popular programming languages surge as much as 44%
Development

Salaries for the least popular programming languages surge as much as 44%

23 Jun 2022
Attracting and retaining talent through training
Sponsored

Attracting and retaining talent through training

13 Jun 2022
The top programming languages you need to learn for 2022
Careers & training

The top programming languages you need to learn for 2022

23 Jun 2022