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The online magazine of the Swiss Bankers Association
2018/06/28 00:25:00 GMT+0

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Swiss cloud – a must-have for the financial centre

Swiss cloud – a must-have for the financial centre

Cloud services can increase the competitiveness of the banking sector, and Swiss cloud providers are waiting in the wings. To successfully migrate the banks’ IT to the cloud, a number of difficult legal issues must now, however, be resolved.

Many of us likely already use cloud services in our everyday lives without being aware of it, for example when sending e-mails, streaming music and films, or to save our most recent holiday pictures. What works in the private sphere should actually also be applicable by highly specialised banks and their complex business. But even though the advantages of a cloud are evident, there are a number of reasons why this is not yet the case.

Key advantages: agility, innovation and cost transparency

The ability to adjust with agility to new developments is a prerequisite for success in the banking business. Due to their specialisation, cloud providers can usually provide their corporate clients with new business functions more quickly and more seamlessly than internal IT departments. They can also provide virtually any combination of services that companies choose.

New technologies can be used in the cloud without the need for major Investments.

New technologies such as artificial intelligence can be used in the cloud without the need for major investments in hardware or software. Innovative ideas can be tested, expanded or rejected and are easier to realise. For example, based on customer correspondence, customer profiles can be created or automated with the help of intelligent software processes.

And finally, a cloud enables full cost transparency and therefore facilitates the more effective management of a company. Because only directly procured services are paid for, a company can react flexibly to changing needs by activating or deactivating IT resources accordingly. The range of «self-service» functions can be used at variable costs.

Advantages in particular for small banks

Due to the fact that it is no longer necessary to establish or acquire the corresponding competencies and resources for an internal IT infrastructure, migration to a cloud is attractive in particular for small institutions. Certain technologies that were previously reserved solely for big companies are therefore now also accessible to small banks and allow for significant economies of scale. Not least of all, the current requirements in terms of IT security, updating necessary patches and managing IT infrastructure lifecycles require a scale of IT operations that especially smaller institutions can hardly afford.

Interest from cloud providers

A number of cloud providers already have an offering in Switzerland or have announced they will be introducing one. However, due to their particular needs, banks cannot yet make full use of these services, in particular as regards client-related data. Some of the difficult legal issues that have yet to be resolved include ensuring supervision, adherence to bank-client confidentiality and cloud providers’ use of sub-contractors. But it is precisely the high level of regulation that makes Switzerland so attractive for cloud providers, because with its strict regulation, Switzerland can serve as a model for other countries.

With its strict regulation, Switzerland can serve as a model for other countries.

A particular challenge for the global cloud industry is the US Cloud Act of March 2018. In principle, it requires cloud providers around the world to hand data over to the US authorities. The measures to be taken to prevent this decree by the US President from becoming a showstopper and clarifications regarding the act’s consequences are currently underway. No uniform legal application has yet emerged and reliable statements from the authorities are also a scarce commodity. This legal uncertainty must be overcome in order for cloud services to be used in full.

Bankers Association on the front line

Due to the major potential that exists in the cloud services segment, the Swiss Bankers Association is highly involved in the efforts surrounding the improvement of framework conditions. The authorities, providers and the sector are in close contact regarding this matter.

At the heart of these efforts is a recipe for the cocktail consisting of technical, organisational and legal measures to ensure data is secure and regulatory requirements are adhered to. However, each bank must define its own strategy for whether, how and which services are to be migrated to the cloud.