How would cloud improve your firm's regulatory response?
Aug 9, 2022 by Harpreet Singh
Quick question: How many capital markets firms have embraced cloud for regulatory reporting, do you think?
In a recent survey, the European Banking Authority (EBA) reported that around 43% of financial institutions said they have an element of cloud computing in their reg solutions. In the same survey, around 70% of RegTech providers said they used cloud as part of their solutions and that satisfaction levels were significantly higher for any type of cloud solution, compared to an on-prem solution. So, it seems that industry is embracing cloud in their reg solutions, but there’s a lot of room to grow.
For firms looking to embrace cloud, remember the simple “3Ds” model:
As-a-Service (aaS) is a journey with milestones such as cloud migration, PaaS, SaaS and so on. Based on your firm's current state of cloud adoption, you might want to target particular milestones, as long as certain prerequisites are met. These essential requirements include understanding your firm’s current cloud strategy, plus its state of adoption and data governance framework. Then you’d be able to choose which regulations can be migrated to the cloud, as well as the right solution and milestone within that solution. Typically, Reg Reporting as-a-Service means taking the software and/or business processes and migrating them in an aaS model.
But if you're aiming for Software as-a-Service or even Platform as-a-Service, it's a really good starting point. In terms of potential, the aaS model is very exciting. You can optimize the existing solution and leverage the inherent benefits of cloud technologies, or make your operating model more resilient because, now, things are working in the cloud. You can look at the issue both vertically (bringing upstream systems into the scope of aaS) and horizontally (migrating a wider set of regulations into aaS).
Like with other industry participants who use a similar solution, harmonization can happen faster, including agreeing on exception management and a break resolution.
It takes a lot of effort to build a RegTech ecosystem. So, the key is to start small and expand.
For this to be successful, you’ll need to create a very strong control and governance framework around it (being an ecosystem, it’s a little loosely coupled). As you build toward it, your organization will have a group of systems working together, using a common data model — that’s a powerful construct. It will enhance your regulatory compliance and enable you to use the data for several other activities. That’s a powerful solution. And a very influential ecosystem.
If you’d like to discover how Luxoft can help you migrate your regulatory response to the cloud safely and securely, visit luxoft.com/capital-markets or contact email@example.com. We’d welcome the opportunity to go over the cloud benefits you can expect in your unique situation, and the excellent business potential going forward.