{"id":48443,"date":"2021-04-23T13:27:48","date_gmt":"2021-04-23T12:27:48","guid":{"rendered":"https:\/\/www.microsoft.com\/en-gb\/industry\/blog\/?p=48443"},"modified":"2022-09-01T08:39:14","modified_gmt":"2022-09-01T07:39:14","slug":"cloud-innovation-agility-and-resilience","status":"publish","type":"post","link":"https:\/\/www.microsoft.com\/en-gb\/industry\/blog\/financial-services\/2021\/04\/23\/cloud-innovation-agility-and-resilience\/","title":{"rendered":"How the cloud drives innovation, agility and resilience"},"content":{"rendered":"
Working across the financial services and insurance industry, we\u2019ve seen how quickly organisations have had to react and shift to remote working and remote selling. For organisations, it\u2019s changed the expectations of your customers, employees, and even your own value chain. This evolution is set against the backdrop of a changing regulatory and security landscape for the sector. This holds significant importance for financial service institutions. Especially as they embrace the use of new technologies, like cloud technologies, to meet these changing market demands.<\/p>\n
Indeed, in a recent report, the Financial Stability Board <\/a>highlighted \u201cthe importance of understanding the ability and capacity of third parties (and the capacity, availability and resilience of third-party technology) to remain resilient in challenging economic and operational environments and continue to adequately provide or support critical functions in FIs.\u201d<\/p>\n Furthermore, a 2020 PwC survey<\/a> found that 75 percent of finance leaders were planning on creating more agile business environments going forward. And that was reflected in business spend. Cloud spending rose 37 percent to $29 billion during the first quarter of 2020. Cloud technologies enable the financial services industry to unlock insights to deliver better customer experiences and bring more customer value. How to stay compliant and secure when you move your workloads from on premise onto a third-party provider is a threshold criterion for financial services. We are supporting this conversation across the industry, including by engagement with financial services regulators.<\/p>\n Recently, we held a regulatory briefing for the sector to share some of our approaches and current observations. In this briefing, we consider the structural changes, how organisations are adapting to these circumstances and how they remain agile in continuing to meet key regulatory requirements. These observations are timely as well. They come on the heels of the Bank of England\u2019s newly issued Supervisory Statement on Outsourcing and Third Party Risk Management<\/a>, which aims to \u201cfacilitate greater resilience and adoption of the cloud and other new technologies.\u201d We share some of these observations below.<\/p>\n <\/p>\n Both regulators and organisations recognise the benefits that the cloud gives to protect against cyber risk and improve operational resiliency. They also recognise that, with cloud technologies, organisations gain the ability to manage risk at scale. At the same time, organisations can take advantage of innovation and agility to further drive business goals or differentiate themselves in a competitive market.<\/p>\n Microsoft provides a rich set of tools to help customers manage governance, such as Compliance Manager<\/a>. This provides a list of recommended actions and detailed guidance to improve controls and capabilities. This can help organisations meet regulatory requirements for areas they are responsible for. Microsoft Secure Score<\/a> measures an organisation’s security posture and provides actions to help improve an organisation’s security posture. Microsoft continues to invest in helping customers manage risk, providing transparency and assurance, to help meet their regulatory requirements.<\/p>\n Further, the cloud can help drive innovation through automation, such as AI and machine learning. With hyperscale computing, you can build agility by gaining more computing power when you need it. This helps you quickly respond to external and internal changes, driving employee productivity from anywhere and creating personalised customer experiences.<\/p>\n As adoption of cloud technologies becomes more prevalent, so does the conversation around concentration risk. We have had considerable engagement with regulators and customers to understand such concerns. At the bottom, this is focussed on concerns about a \u2018single point of failure\u2019, and how to manage and mitigate against such risks. Of course, the risk itself is not new with cloud technologies. Legacy systems \u2013 particularly the mainframe \u2013 present such risks in current environments. Indeed, cloud technologies can help unlock value by removing lock-in with legacy systems in favour of more agile and resilient hyperscale cloud systems. Such strategies include availing use of availability zones and regional pairing of distributed regions to provide for high-resiliency and data replication. Even in the case of \u2018black swan\u2019 events, these strategies can mitigate against such catastrophic occurrences.<\/p>\n In addition, firms should have in place business continuity and exit plans as part of any overall outsourcing strategy. We have created an Exit Planning for Microsoft Cloud Services Whitepaper<\/a> to help assist organisations. With such governance and strategies in place, firms may opt for a primary cloud vendor without the need to multi-source. A multi-source approach can add complexity and additional risk. There is no one-size-fits-all approach. However, our experience shows such risks can be managed, consistent with regulator expectations. Of course, this is only if a firm\u2019s governance posture is soundly organised to measure and mitigate against such risks.<\/p>\n <\/p>\n At Microsoft, we\u2019ve been engaging with regulators in key capital markets since 2012. We have continued to share perspectives about how to modernise and adapt regulations to account for permissibility of cloud technologies. This is while helping financial institutions operate in a safe and sound manner and stay consistent with regulatory objectives of managing risk. Thus, a centrepiece to our strategy is to provide for continuous engagement with key stakeholders \u2013 financial organisations and regulators alike. Through this feedback loop, we can constantly share perspectives, learn from each other, and drive towards mutually shared objectives of facilitating innovation. Ultimately, this will help manage risk, and ensure the financial ecosystem remains vibrant, secure, and resilient.<\/p>\n In addition, our innovative Financial Services Compliance Program allows organisations to engage directly with Microsoft engineers. This program focusses on cloud risk, cybersecurity, regulatory compliance, data privacy and risk monitoring to help them get the most out of their cloud strategy.<\/p>\n As we come around from the events of the last year, we know this journey is not over. Nor is it just beginning. We are excited about the future. We see huge promise to help the industry move forward during these rapidly changing times. Our role is to help firms innovate. To help firms meet their regulatory compliance needs. And in this opportunity is our responsibility to remain a trusted partner to the financial services industry, to drive change in a safe and sound manner, just as regulators expect, and our customer’s demand.<\/p>\n See our perspective on concentration risk<\/a><\/p>\n Download the Redefining Risk Management eBook<\/a><\/p>\n Discover how to start your transformation<\/a><\/p>\n Exit Planning for Microsoft Cloud Services<\/a><\/p>\nCloud transformation<\/h2>\n
1.\u00a0\u00a0\u00a0\u00a0\u00a0 Data governance, innovation and agility in the cloud<\/h2>\n
2. Mitigate and manage concentration risks in the cloud<\/h2>\n
3. Working together to improve assurance and enable regulatory compliance<\/h2>\n
Find out more<\/h2>\n
About the authors<\/h2>\n