We often get asked by companies operating in regulated industries the following questions about cloud services:
“Are we allowed to move services to the cloud? Is it safe? Will this impact on compliance?”
Happily we can reassure you that industry regulators in the financial services and the legal sectors are agreed that cloud computing is safe and doesn’t go against data security and compliance guidelines: provided it is implemented correctly and appropriate controls and policies are in place.
In 2016 the Financial Conduct Authority (FCA) approved the use of cloud computing. In a published recommendation, the FCA said there is “no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules.”
Although their recommendations aren’t binding, the FCA does outline guidance on how firms outsource to third-party IT and cloud service providers.
In an article for the Law Society, former Chair of the Technology & Law Reference Group at the Law Society, Dr Sam De Silva says;
“Cloud computing can provide flexibility, enhanced security, better quality services at a lower cost, and improved mobile and collaborative working, but is not without risks. Law firms should feel confident using cloud services, so long as they do so with ‘eyes open’ to these risks. From a contractual perspective, the “devil is in the detail”, so cloud computing contracts need to be reviewed carefully.”
Global regulated cloud adoption
The FCA and legal regulators are simply catching up with the digital technology that has allowed non-regulated sectors to benefit from cost savings, improved productivity and increased agility for several years. Many regulated businesses like those in financial services are now using cloud services across everything from client lifecycle management to customer relations, analytics, HR, email, marketing and other non-core uses.
Larger banks are working with financial tech (fintech) providers to transition in core areas too, including the use of Blockchain and APIs in payment processing, whilst smaller banks and lenders have already adopted a more agile approach. Some challenger banks, such as Durham-based Atom, are implementing everything from the cloud.
According to the International Data Corporation (IDC), worldwide cloud computing spending in the banking sector is set to exceed $16.7 billion. Professional service firms, particularly law and accountancy practices are set to spend $18.1 billion in 2018. Right now, the estimated compound annual growth rate (CAGR) for cloud service spending is 21.9%, with no signs of a slow down.
The spending report found that: “Even heavily regulated industries like banking and finance are using SaaS for non-core functionality, platform as a service (PaaS) for app development and testing, and IaaS for workload trial runs and testing for their new service offerings.”
Legal sector cloud adoption
Law firms are embracing cloud computing too. Convenience and accessibility – when working away from the office – and increasingly demand from clients are driving this trend.
Digitally savvy younger clients increasingly expect to use the cloud for a host of different applications. Clio, the world’s leading practice management platform with 150,000 law firm clients found that 30% of clients age 25 – 34 prefer to share documents with lawyers using secure cloud services than traditional ways.
Lawyers too, are also turning to cloud services to store documents and record billable time. It is easier and more accurate to record time spent on work in the cloud than by hand, which is something clients are starting to trust and expect. Cloud services have also proven themselves to be invaluable for lawyers working remotely – i.e. from court or from their clients’ offices – enabling them to access documents and systems securely.
Of course security is paramount in regulated sectors, and one the most significant barriers to cloud adoption has been concerns over security. With the right security solutions and controls the cloud can provide a secure environment for highly sensitive data, as well as enabling companies to meet compliance requirements.
In fact, security is increasingly a key driver for cloud adoption as legacy IT solutions don’t meet the needs of professionals today. On premise legacy IT systems are often a barrier to mobility in sectors where employees often work offsite. This has an impact on productivity if employees can’t access the files or systems they need to work. It can also create an environment where employees take shortcuts and circumvent security controls to enable them work – such as saving documents to their own device.
Cloud services can provide remote workers with a secure environment to work in, increasing productivity and ensuring that employees adhere to security policies.
Cloud adoption is a win – win for law firms, financial service providers and their clients when the right solutions are selected and appropriate controls and policies are in place. Working with a dedicated and trusted IT partner is the best way to identify how you can benefit from the cloud whilst keeping sensitive data safe, and staying on the right side of regulatory compliance.
Get in touch with our team if you would like to explore cloud services in more detail. You may also like to download our case study with law firm Dutton Gregory which outlines how UKN Group supported this company’s transition to the cloud.