European Commission consultation on FinTech – Bad news for the Cloud

On 23 March 2017, the European Commission launched a public consultation entitled “FinTech: a more competitive and innovative European financial sector”. The consultation closed on 22 June 2017. The purpose of the consultation was to seek input from stakeholders to further develop the Commission’s policy approach towards technological innovation in financial services.

226 firms responded and the Commission released a summary of the responses.  In response to the subject:

Recording, storing and securing data: is cloud computing a cost effective and secure solution?

A vast majority of respondents expressed concerns about using cloud services due to a lack of clarity regarding their use in financial services, a lack of harmonisation between national rules and different interpretations of European rules by national supervisors.

Various interpretations of personal data handling across the EU and data localisation restrictions were obstacles identified in most contributions.

A significant number of respondents pointed to the need for Cloud Service Providers to adapt their offer to specific constraints of financial institutions (e.g. audit obligations).

The high concentration of Cloud Service Providers was considered as a source of risk by some respondents.

To tackle these issues and support the adoption of cloud computing by financial services providers, some respondents were in favour of a limited intervention at EU level (e.g. high-level principles at EU level but guidance from national supervisors), while others called for stronger intervention to ensure legal certainty and harmonise rules in using cloud services (e.g. EU requirements for cloud services that could become standards for international cloud computing agreements).