Cloud and Regulation: Is a Meeting Point Possible?

Cloud and Regulation: Is a Meeting Point Possible?

Public cloud is gaining ground

“By 2021, public cloud services are expected to grow at an average annual rate of 16.5% in the financial services sector,” announced Marcus Hammer, EMEA KI Lead Market Analytics at Gartner, to the technology leaders gathered by Proximus NXT. “In 2018, 80% of banking CIOs and 75% of insurance CIOs had already increased their cloud investment budgets,” he added.

Of course, to meet the expectations of financial institutions, regulatory constraints must be taken into account — which also presents challenges for regulators struggling to keep pace with innovation — and public cloud services must offer high levels of security. On this point, Gartner notes that public cloud is often a more secure starting point than on-premises implementations, that workloads can be more secure in public cloud than internally, and that SaaS applications offer advantages in security and service continuity.

In any case, Gartner observes a convergence between data centers and cloud toward a hybrid hosting model: companies increasingly operate both traditional and cloud environments as a flexible portfolio, managing service delivery according to needs while ensuring consistent service levels.

Turning regulatory compliance into a catalyst

But what about regulatory compliance? Jacques Ruckert recalled that Luxembourg has had, for about fifteen years, a specific legal framework applying to IT service providers entering outsourcing agreements with financial institutions. “These Professionals of the Financial Sector (PSF), including Proximus NXT, are regulated to reduce operational risk and confidentiality breaches,” he said.

The regulatory framework has recently been strengthened with CSSF Circular 17/654 — the cloud circular — which sets out the conditions for outsourcing services to cloud infrastructures. “The circular allows supervised entities, meaning financial institutions as well as PSFs, to use public cloud services under strict governance rules. Moreover, Luxembourg legislation is aligned with European Banking Authority recommendations, making support PSFs such as Proximus NXT potential catalysts for cloud adoption across financial institutions, not only in Luxembourg but across Europe,” added Jacques Ruckert.

Proximus NXT aims to facilitate and accelerate financial institutions’ access to public cloud by combining the value of public cloud with its own hosting capabilities. To achieve this, the company works closely with Cisco, a long-standing partner and leader in connectivity and networking, and with Google, whose cloud platform is built on a strongly open-source approach.

The innovation power of open source

“Google is deeply committed to promoting open-source solutions and technologies,” confirmed Bob Krentler, Head of Global Technology Alliances for Google Cloud. The Mountain View company’s services and tools allow customers to migrate freely to hybrid or multi-cloud environments without fear of vendor lock-in that could compromise exit strategies.

Google also brings strong advantages to financial institutions. The company controls end-to-end the full stack of its Google Cloud Platform (GCP), from servers and data centers to storage and networking, including intercontinental links. Google has invested around $30 billion in this infrastructure over the past four years.

“Google’s mission is to be a driving force of innovation in the cloud. We invest globally in future technologies. Research conducted over 20 years in AI and machine learning is now made available to customers through open-source products and solutions. We are also heavily investing in hybrid cloud, multicloud, analytics, security, and risk management.”

Hybrid cloud as the backbone of the digital economy

“According to IDC’s latest CloudView study, 94% of companies are using or planning to use a multicloud environment: there is no doubt that multicloud is the new reality,” noted Jeremy Oakey, Senior Director Enterprise Product Management at Cisco.

Today, applications are a key driver for organizations. Companies aim to accelerate innovation and move at cloud speed to deliver faster features and better user experiences. “Organizations want access to the latest technologies — containers, microservices, public cloud platforms — to drive digital transformation. Cisco’s goal is to provide a secure hybrid cloud platform to build and operate digital services. This is a key enabler of innovation demand.”

Two major imperatives shape this new hybrid cloud generation: modernizing on-premises infrastructure while building new cloud-native applications, and adopting public cloud services to benefit from their scale, speed, and capabilities.

“With Cisco Hybrid Cloud for Google Cloud,” explained Jeremy Oakey, “Cisco and Google have joined forces to deliver a new generation of hybrid cloud.” The platform integrates open-source tools, networking APIs, security, management, and data center software. “Optimized for Google Cloud and fully customizable, all components are supported by Cisco without exception,” he added.

Leveraging cloud benefits on-premises

Based in Luxembourg, KNEIP is a leader in data management and reporting solutions for the investment and insurance industries. “As part of our transformation plan, we chose to build a new digital platform designed to meet regulatory and market requirements while significantly reducing operational time, resources, and costs,” explained Patrick Hilt, CTO of KNEIP.

KNEIP’s transformation covers all aspects of the company — technology (SaaS usage, high automation, continuous delivery), organization (agile and data-driven), and culture (acceptance of failure and product orientation).

“Our approach is to leverage cloud flexibility, run certain workloads in cloud or hybrid mode, and prepare for public cloud adoption,” added Patrick Hilt.

KNEIP relies on cloud and DevOps to drive its digital transformation. “By deploying in a consistent, high-quality, and repeatable way, we can treat infrastructure like code,” said Kevin Brannigan, Head of Engineering Operations. “We aim to bring our teams and services into the 21st century using microservices and as-a-service tools. We use containers and orchestration to optimize deployments, increase scalability, and maximize workloads.”

He concluded: “Cloud should not be adopted for its own sake. Make the right technological choices based on real business needs, and be careful not to scare away or lose existing customers. You need a clear vision and the right talent to execute it.”