Leading FSI in the region are using regulations to help steer public cloud initiatives, and not as an excuse to stop them – a mindset that more should adopt in order to thrive
Hong Kong, May 17, 2016 – Financial services institutions (FSI) across the Asia Pacific region are under immense pressure to increase agility, improve efficiency, and embrace digital transformation, according to a study by Forrester Consulting. In March 2016, reviews by the Securities and Futures Commission in Hong Kong highlighted deficiencies within enterprises in not fully recognizing the genuine and significant threats posed by cybersecurity risks to their businesses, and in not adequately addressing these threats. Many organizations in the sector still lack thorough understanding of cloud-related banking regulations in order to completely embrace and take advantage of cloud computing.
The study commissioned by Microsoft, ‘Cloud is Critical to Digital Transformation in the Asia Pacific Financial Sector’, evaluated cloud adoption trends among FSI in Asia Pacific and gauged their knowledge and perceptions of cloud-related financial regulations. It analysed the impact of regulatory compliance, security and privacy, and reliability concerns on current and future cloud initiatives.
The study states that Forrester believes that to thrive, FSI in Asia Pacific will (and must) increasingly embrace cloud computing — both public and hybrid and must therefore understand cloud-related banking regulations, formalize internal cloud policies, and implement best practices for engaging with cloud providers and banking regulators.
One key finding from the study was that leading FSI in the region are actually using regulations to help steer public cloud initiatives, and not as an excuse to stop them. The better the firms’ understanding of regulations, the more likely they are to embrace public cloud services. In most instances, these initiatives are directly tied to customer-facing, digital banking capabilities like new customer acquisition and on-boarding.
The study shows Hong Kong firms are pragmatic but optimistic. Hong Kong firms generally centre cloud approaches on improving IT responsiveness to internal business demands for cost reductions and improved agility. These are primarily translating into both public and hybrid cloud initiatives to increase utilization rates and cut time to provision and de-provision IT-enabled services. Public cloud initiatives are part of many banks’ near-term plans, particularly for new or expanded digital initiatives.
“Today the attitudes toward implementing cloud and the related internal policies among FSI in Asia Pacific is clearly maturing as it is increasingly seen as an enabler of the organization’s journey to digital transformation. But it is important to realize that a cloud strategy can only be successful if there is a clear understanding of cloud-related regulations. As organizations’ understanding of regulations increases, so too does their understanding of how and when to engage regulators and, then in turn, their readiness to adopt cloud solutions,” said Neal Suggs, Vice President and Associate General Counsel principles, Microsoft.
Other highlights from the study include:
- In both mature and high-growth markets, firms interviewed for this study illustrated a lack of regulatory knowledge, citing perceived restrictions to cloud adoption/usage that aren’t actually present in regulations.
- Defining strategies for engaging and interacting with banking regulators has become crucial. As firms’ understanding of cloud regulations increases, so too does their understanding of how and when to engage regulators. Banks are reaching out to regulators more proactively and frequently to build relationships, establish trust, and address potential compliance issues earlier in the process.
- Cloud providers are viewed as an essential part of the banking ecosystem in most Asia Pacific markets. FSI do not consider cloud providers to be mere passive utilities. Instead, they are expected to actively engage regulators to help shape their cloud delivery models and practices, thereby ensuring that proposed cloud initiatives are compliant with local (and regional) regulations and, hence, are more likely to be approved and implemented.
The study was conducted from November 2015 to February 2016, and involved in-depth interviews with 34 senior IT decision-makers in the Asia Pacific financial services sector from nine countries: Australia, Hong Kong, Korea, Malaysia, New Zealand, Japan, Indonesia, Singapore and the Philippines. Forrester found that these organizations are at vastly different levels of maturity in cloud understanding and adoption.
Please click here for download the study by Forrester Consulting
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