Regulators globally have expressed mixed feeling on banks and financial institutions (FIs) moving into cloud computing. The top of the list concerns are security and data privacy. There are a lot more though. The recent data breaches and data theft will in no way improve on this thinking. While it is quite understandable, it is not a good trend. The banks and FIs  will miss the bus if the cloud passes by.

Post the financial crises, the regulators are falling over each other tightening compliance laws.The cocktail talk each evening is which regulator tightened the hardest. With each turn of the screw compliance is becoming all the more expensive. The banks are smart. The buck is passed to the hapless customers; a classic example of customer centricity.

Something smart to leverage the benefits of cloud needs to be done and soon. I am not shouting from the roof top, to allow banks to move onto the cloud. It is the common services that all banks use in the jurisdiction, the regulators will have to own. These must be segregated and offered as a service. To name a few, payment services, credit check services, document services, RDCs and so on. Each member bank will 'pay per use' for such services.  More the banks the merrier. Each bank is spending money on infrastructure, platforms and applications for these common services and compliance to regulations and standards. In the cloud environment all that a bank has to do is connect to the cloud with industry standard generic adapters. All and any upgrades will be at a singlepoint, seamless and transparent. No more revamp costs. For RDCs, mobile or on premise such a service will be God's gift for compliance. In addition the compliance and security auditors will have to audit the cloud carrier. The audits of diverse systems in multiple banks can be avoided. The cost of compliance is better managed in such a scenario. The banks today have built complicated one time use interfaces with various alliance partner solutions . This is so daunting any decision to change the core processing system is fraught with risks. 

The regulators will soon have to see the 'enterprise' view of all banks and financial institutions. Their role is not only to make hard to comply regulations, but to think laterally how to leverage high risk technology. The encouraging way is to minimise risk and maximise opportunity.