Financial services institutions recognize the huge value of cloud computing, yet as adoption rates grow, so do concerns around data security. Sovereign cloud offers a way for them to launch innovative investment products and services, better understand the market, and adhere to ever stringent data security regulations.
The innate cost effectiveness, flexibility and scalability of cloud computing makes it an engine for transformative change in most industries today. As many as 91% of banks and insurance companies have embarked on cloud transformation journeys to become more agile, innovative and productive. And yet the vast majority aren’t tapping into the full potential of those benefits as they’ve only moved a small proportion of their business-critical operations to the cloud.
Why? It ultimately comes down to data security. In one survey, global leaders cited “security and compliance risks” as a top barrier to achieving expected cloud value. To protect their most sensitive data and adhere to stringent regulatory requirements, banks and insurance companies still largely rely on private cloud and on-premises environments to house their core business applications. In some cases, this has hindered them from accessing new technology breakthroughs in the public cloud. However, a fast-emerging cloud computing architecture called sovereign cloud offers a way for even the most highly regulated industries to combine the best of both worlds of security and innovation.
Sovereign cloud is ultimately about storing critical data within a specific location, such as a local country or region, and protecting it from foreign access. It means that users can be sure that their data complies with all the latest data privacy and security standards in a certain country or sector. Over the last couple of years in particular, more major cloud providers have begun to offer sovereign clouds to keep up with demand for greater control over how data is used and shared.
Regulatory compliance and data protection in the sovereign cloud
In the investment space, companies must navigate a challenging and complex regulatory landscape. In 2023, financial institutions spent over US$206 billion on compliance alone.
Today’s fast-moving political landscape and fluctuating economic conditions play into the whole concept of sovereignty. Particularly in Europe, there’s a great deal of pressure on the financial sector to ensure information privacy and up their risk management strategies in accordance with the likes of the General Data Protection Regulation and the Digital Operational Resilience Act (DORA).
Taherah Kuhl, Vice President of Business Services at Dassault Systèmes
These challenges are compounded by the need to deliver greater transparency to investors. Rules like MiFID II (the second Markets in Financial Instruments Directive) and PRIIPS (the Packaged Retail and Insurance-based Investment Products Regulation) put pressure on banks and insurance companies to deliver accurate and clear information to support informed investment decisions. Data, then, and their ability to harness it at scale, implement associated controls and navigate an ever-changing regulatory landscape across multiple countries has become a key competitive differentiator.
For many, this requires a step change in how they manage investment and regulatory compliance – switching from a largely manual to a more automated monitoring approach. Cloud sovereignty opens up exciting opportunities for them to move more of their mission-critical operations to the cloud and take advantage of cutting-edge advances around artificial intelligence (AI) and machine learning (ML) to launch new products to market faster, safe in the knowledge that their data adheres to all the latest industry protocols.
Regulations are changing at an unprecedented pace and bring a lot of new constraints – there is more and more investment compliance to confirm, and these controls need more and more data to compute. Protecting banks’ and asset management companies’ position in the market requires a lot of analysis and intelligence. Asset managers need a new way of managing their funds with the support of technologies such as AI and process automation.
Philippe Miltin, CEO of OUTSCALE at Dassault Systèmes
Sovereign cloud solutions support ESG reporting
The rise of environmental, social and governance (ESG) reporting also fuels the need for greater data insights and transparency. Around 85% of chief investment officers factor ESG impact into their key investment decisions and growing, driven by mandates like the Sustainable Finance Disclosure Regulation (SFDR), which require financial institutions to provide ESG information to investors, such as a company’s carbon footprint across business functions and products.
Again, sovereign cloud offerings tied up with ESG impact measurement tools will play a pivotal role in helping the industry to manage reporting and achieve their sustainability goals.
Attention is really shifting to ESG and how to meet net-zero requirements. It’s no secret that there’s a lot of greenwashing still happening right now, so financial institutions must be diligent when it comes to labelling their bonds and investment products as being ESG compliant. Again, data-driven insights are critical.
Taherah Kuhl, Vice President of Business Services at Dassault Systèmes
Why financial services companies choose OUTSCALE
Banks and insurance companies increasingly look to sovereign cloud solutions like OUTSCALE Business Experience for Financial Services to support their operational and regulatory challenges as well as to optimize data management and automate certain tasks.
We’ve already worked with many financial institutions to provide our sovereign cloud solution. Facing different regulations in different geographies, they must show that they have the correct security credentials in place and that increasingly means they need to use cloud environments with the recognized certifications for specific regions. Looking ahead, organizations may not completely replace their existing cloud providers, but they may have certain data that they prefer to store with a specialized sovereign cloud provider.
Taherah Kuhl, Vice President of Business Services at Dassault Systèmes
Packaged within OUTSCALE, users can expect:
- Strong industry expertise and awareness of the issues financial institutions face.
- Powerful AI models and proprietary algorithms.
- Sovereign cloud environment to manage compliance with industry regulations: OUTSCALE’s commitment to legal and regulatory compliance sets it apart as a trusted partner, particularly on French territory.
- Global presence: OUTSCALE’s agility to adapt to changing national and international regulations positions it as a reliable partner for financial institutions
- Sustainable platform to support the financial services in their ESG and net zero objectives.
- Independent technology provider: Financial institutions recognize the value of sourcing services from OUTSCALE rather than competitors within their own sector, appreciating OUTSCALE’s focus on innovation and tailored solutions.
Today, other vendors might offer parts of our solution, but none is proposing a comprehensive experience running on a sovereign cloud to ensure the security of information. OUTSCALE promises to rationalize processes and enhance overall efficiency, leveraging the power of AI to automate low-value tasks. This efficiency and client-centric security hold the potential to improve the investment banking experience and contribute to the global positive transformation of the industry.
Philippe Miltin, CEO of OUTSCALE at Dassault Systèmes
Taherah KUHL, Vice President Business Services Industry, Dassault Systèmes
Taherah has worked at Dassault Systèmes for the past 7 years. Focused on the Financial Services & Logistics industries globally, Taherah is responsible for driving the industry strategy and vision. LinkedIn profile
Philippe MILTIN – CEO of OUTSCALE, Dassault Systèmes
After more than fifteen years at Bull and then Atos, Philippe Miltin assumed leadership at OUTSCALE, a Dassault Systèmes brand, in September 2022. His mission is to position OUTSCALE as the sovereign and sustainable operator of trusted experience as a service. LinkedIn profile
Global Industry Marketing Leader, Business Services at Dassault Systèmes