Shield - The New Compliance Normal for Financial Firm

The New Compliance Normal for Financial Firm COVID-19 accelerated the migration of financial firms to the cloud

This is the first in a series of blog posts dedicated to “the new compliance normal.� RegTech companies have joined the conversation to talk about how regulatory compliance regarding market abuse has shifted since the pandemic began. During the research for this post, it was apparent that many of the firms addressed the shift to cloud as a possible solution to the current challenges that the pandemic brought with it.

Perhaps the greatest effect of COVID-19, beyond the catastrophic loss of life and financial turmoil, is the migration to the cloud by financial firms.

Whereas digital transformation was a concept (pre-COVID), it has emerged as the new business imperative.

Banks have been slow to embrace cloud computing

Banks have been slow to embrace change and to adopt new technology overall, some are arguably fully resistant to the idea of migrating financial services information and services into the cloud. But the new compliance normal is forcing a shift.

Banks, called out for their resistance, cited “regulatory ambiguity� as the primary reason for their reluctance to embrace the cloud yet it is now regulatory compliance.

According to Lysis Financial, select firms, particularly those in Ireland, who were already prepared “with effective and tested business continuity plans� fared well and were almost unaffected. Cloud-based infrastructures have enabled firms to be resilient, compliant and minimally impacted by the pandemic.

The benefits of a cloud-based compliance solution • Larger banks have offered data that suggest a cloud-based strategy affords them about a 25% savings on IT infrastructure costs. Collectively, that’s about $15 billion per year. • However, mid-size and smaller banks may not be seeing the same cost advantages; some even suggesting that their costs are now higher.

• According to FIS, “Managed Services in the cloud are not just less costly but also more accessible even in adverse conditions.

• It has never been more apparent than on-premise compliance software brings along significant risks. The ability to conduct remote installations and upgrades is becoming a requirement.”

• Cloud-computing enables multi-channel relationships with customers at every step and for every service from data storage and transfers to the delivery of just-in-time services.

• Firms should be looking to the Cloud for adaptable solutions that can be used at-scale to meet business needs as they fluctuate during uncertain times.”

The future came quicker than expected COVID-19 has brought the future to the present. The new compliance normal has arrived. Alyne states, “Smooth future-orientated operations may be extremely challenged if the organisation continues to rely on on-premise software. There is no better time than now for institutions to adopt scalable, cloud-based solutions.�

Gain insights and knowledge at The New Compliance Normal Hub and contact us if your organization would like to contribute to the conversation.

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