Tamara Tanaskovic/ November 4, 2019/ Uncategorized

According to a recent survey by Finextra Research, 83% of respondents think that the present technology of their financial institutions doesn’t meet today’s requirements. Even more support the implementation of cloud-based services into a new banking infrastructure. In this context the term ‘cloud’ is frequently used, but in fact it is SaaS. What is the difference?

Cloud computing is an internet-based IT infrastructure including memory, computing power, and software that is offered as a service.

Software as a Service (SaaS) is part of the cloud computing service that is limited exclusively to the online availability of software.

There are plenty of options that financial institutions can chose from; however, the question should be where to apply cloud computing or SaaS rather than if a cloud solution is applicable at all. In addition to ‘banking- as a service’ established by FinTechs, an application could be ‘compliance- as a service’.

Like other industries, the financial service sector is changing rapidly, and new regulations are perpetuating this development. Therefore, agile solutions are needed. A cloud-based strategy to combat financial crimes is the next step. A SaaS solution manages banking activities of the entire KYC-AML program, such as customer due diligence (CDD), risk analysis, monitoring of transactions, and controlling of customers and accounts. The advantages of SaaS based solutions are centralized support services, maintenance of infrastructure, and a comprehensive response to changing requirements. A crucial factor is the minimization of costs for server, computing centers, and other core IT infrastructures. Operating expenses and costs to maintain the infrastructure can be omitted.

To ensure the security and confidentiality of data saved to the cloud, regulatory authorities require financial institutions to implement checks and security measures. Data related to customers and transactions are of immense importance to banks, which is why the demands of the financial industry on their IT compliance solutions, especially regarding security, are particularly high.

Secure networks and servers are the basis for a secure transmission of data in the cloud, because they are key to prevent unauthorized access. Compliance regulations require that banks have control over the location of data at all time and know how data from different cloud customers are separated from each other.

The geographic location of the infrastructure is another critical point for data security. Therefore, one requirement is that computing centers handling sensitive data from European banks are physically located within the EU. Only this ensures legal certainty in respect to the GDPR and excludes the possibility that sensitive data are relocated in less regulated territories.

However, a good provider of cloud-based services offers not only a secure server configuration but has also a sound understanding of the regulatory and safety aspects. Banks should only approach qualified service providers that are familiar with and comply with all sectoral guidelines.

Taken together, the cloud offers numerous possibilities for the financial sector, which should be used and is no longer just a hype of the FinTechs.



Photo by Alex Machado on Unsplash

Tamara Tanaskovic

About Tamara Tanaskovic

Tamara Tanaskovic is a Senior Consultant with targens GmbH. After her university degree with the focus on criminal law, postgraduate studies in London in the fields of competition law, bank regulation and compliance followed. She is currently project manager within the product SMARAGD MDS and therefore responsible for the creation and optimization of rulesets in coordination with the respective department of the customer company. Furthermore, the specialist review and the determination of legal and regulatory requirements to the SMARAGD Compliance Suite are part of her core competences.