Clear Skies Ahead
Poll finds that North American bank executives predict nurturing regulatory environments on their technological innovation journeys.
It’s no secret that technology has revolutionized not only the way banking is conducted but the way people and businesses engage in commerce.
From buying movie tickets to approving corporate credit, financial services that are commonplace today were merely conceptual only a few years ago.
And thanks to the overwhelming benefits that innovation brings, those changes will keep on coming.
Yet with disruption taking place on such a massive scale, it’s only natural for regulatory bodies to make sure progress goes smoothly, legally and benefits everyone involved, the end user especially.
And it’s also natural for a financial institution looking for opportunities to wait and see how things play out in terms of legality and compliance, to make sure all norms and laws are understood from square one.
Who doesn’t want to do the right thing and be compliant?
That dust of uncertainty appears to be settling in North America, as regulators want to see financial services thriving, including on the cloud.
Banks, it seems, feel that way.
According to a recent survey of global banking executives conducted by Economist Impact in association with Temenos, 79% of North American participants believe that a multi-cloud strategy will become a regulatory pre-requisite in the next five years.
That’s well above the 60% figure forecast by banking executives in Europe, where adoption has progressed further.
Add to that, 90% of North American banks feel technology will affect their business environments more than any other factor in the coming years, well above a global average of 63%.
In a far distant second place, only 23% of survey participants in North America said regulation on cloud/digital technology would have the most impact followed by changing customer behaviors (21%) and changing competitive environments (11%).
Translation: new technologies will shape the industry way more than compliance or even certain economic fundamentals.
Regulatory uncertainty—not regulations themselves but ambiguity sometimes associated in anticipation of new norms—can sometimes delay capital and operational spending.
The good news is there’s no need to fear widespread murkiness today.
In the U.S., for example, oversight officials know that the future of finance is in the cloud, but of course, they want consumers to remain safe.
And, of course, there is always room for progress.
A 2023 U.S. Department of Treasury report found that while cloud services can improve both access and reliability for local communities, financial service firms ramping up their reliance on cloud-based technologies need more visibility, staff support, and cybersecurity incident response engagement from Cloud Service Providers (CSPs). 1
Nevertheless, this report, conducted with the Financial and Banking Information Infrastructure Committee along with other private-sector stakeholders, trade associations and think tanks, recognized the importance that cloud banking will bring to financial services.
There is no question that providing consumers with secure and reliable financial services means greater demand for cloud-based technologies,” Deputy Secretary of the Treasury Wally Adeyemo said in a statement. “Treasury is committed to working with financial regulators, industry partners, and cloud service providers to drive greater collaboration and transparency. By building trust, cooperation, and collaboration at the outset, we can promote safe and effective migration for financial institutions that choose to adopt cloud services.”
The report did recommend greater collaboration to address transparency & risk management and monitoring, talent gaps, exposures to breaches and outages, market consolidation, imbalances in vendor contracts and services and a lack of uniform international challenges.
Temenos and partners have taken the lead in addressing those challenges and will continue to do so as would any responsible financial institution with plans to modernize its approach to technology.
Those who offer or facilitate the offer of financial products and services will only benefit from an industrywide migration to modern digital banking, and regulators have got your back.
They want to see you succeed, so the time to turn strategy plans into reality is now.
Everyone is on your side. Your shareholders, your customers and even your regulators.
Make your move today. You’re approved.