Thursday , December 9 2021

Regulators Task to Create Enabling Regulatory Environment for Cloud Banking Services

African regulators have to support and approve the use of cloud technology within the financial sector, says a new industry report.

The study, Cloud Banking in Africa: The Regulatory Opportunity, by Genesis Analytics and Orange Business Services, says cloud computing has the potential to unlock value in financial services through reducing costs.

It urges regulators to follow global trends in the use of cloud technology within the financial sector, saying cloud computing creates an opportunity for service providers to rethink their technology spend and significantly reduce costs.

“The report urges African regulators to develop clear policy positions and regulations on data privacy, risk and security; data sovereignty; cyber crime; protection of intellectual property; vendor risk; and migration complexity as well as operational risk, to enable financial institutions to reap the benefit of cloud banking,” says Genesis Analytics.

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The report calls upon African regulators to follow their peers in the European Union, which it says has been at the forefront of defining an enabling regulatory environment for cloud banking services, which involved both the regulation of the use of data, and privacy and protection of data.

It reads: “Under the regulations, financial institutions have to ensure consumer personal data is gathered legally and under strict conditions and that consumer data is fully protected. Other developing markets like Turkey and Argentina have adopted similar legal and regulatory environments, which has enabled the use of cloud banking in their financial sectors.”

The researchers argue further that more than 700 million Africans lack access to a bank or mobile money account, and cloud solutions can ease the situation as they help reduce the costs of serving clients.

The report says cloud computing allows banks to pay less for ICT infrastructure and services, and achieve higher utilisation on ICT spend.

“Particularly for small banks in small markets where specialised ICT skills are in short supply, cloud computing can ease a critical operational constraint.

“The most compelling reason to move to the cloud is undoubtedly cost savings, but there are other business reasons too. The flexibility of cloud-based operational models allows financial institutions to experience shorter development cycles for new products, which supports a faster and more efficient response to the needs of customers.

“Cloud computing provides the computer power necessary to deliver analytical insights in real-time, which enables financial institutions to move towards a customer-centric model where the financial needs of customers are fully understood. Financial institutions can also gain a higher level of data security, resilience, fault tolerance and disaster recovery from cloud computing.”

According to the report, a few international and African banks have already realised the value of cloud banking.

About Bukola Olanrewaju

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