U.S. Treasury Department officials highlighted several challenges facing financial firms that are increasingly turning to cloud computing services to support a range of their activities, warning in a report on Wednesday that failure to address them could leave lingering vulnerabilities.
The risk was particularly acute for small and medium-sized financial institutions, the department said.
Deputy Secretary of the Treasury Wally Adeyemo said while “there is no question that providing consumers with secure and reliable financial services means greater demand for cloud-based technologies,” there needed to be “safe and effective migration” as banks and other financial companies adopt cloud services.
“Treasury found that cloud services could help financial institutions become more resilient and secure, but that there were some significant challenges that could detract from these benefits,” department officials wrote in their report assessing current cloud adoption in the financial industry.
Those issues include financial firms’ exposure to potential cyber incidents, an industry-wide reliance on a small number of cloud providers and a lack of technology workers able to help financial institutions deploy cloud services, among other challenges, department officials said.
The report also noted that the patchwork global rules made it “nearly impossible” for larger firms to consistently adopt cloud systems globally.
For example, financial firms and cloud service providers in the European Union are facing stricter rules, and will need to show how quickly they could recover from a cyber attack under a law due to take effect at the end of 2024. read more
Treasury officials recommended steps that could help the sector adopt cloud computing, adding that it “neither endorses nor discourages cloud service adoption by the sector.”
The banking industry was generally supportive of the report. The Bank Policy Institute, which represents larger banks, said in a statement it welcomed collaboration with government officials on bolstering cloud adoption and addressing risks.
The department was establishing a working group to address the challenges raised in the report and said it would work with U.S. financial regulators, the industry and international partners to address the risks.
Technology companies that provide cloud computing services include Amazon Inc’s (AMZN.O) Amazon Web Services, Alphabet Inc’s (GOOGL.O) Google, Microsoft Corp (MSFT.O) and Oracle Corp (ORCL.N).
