Financial services providers now confront a variety of difficulties in their quest to be on the cutting edge of market trends, client needs, innovation, data privacy, and other issues, all while trying to keep up with a regulatory environment that is always changing.

We talk to IBM Cloud General Manager Alan Peacock on how financial services companies can stay innovative and compliant at the same time.

IBM: New technology is causing the regulatory environment to change quickly

According to Alan, in order for financial services companies to be compliant, they need to be ready to handle needs unique to each location. This entails being competitive with the fast expanding data warehouses involved with implementing AI, while also enacting legislation such as the Digital Operational Resilience Act (DORA) and planned laws like the European Union Cybersecurity Scheme for Cloud Services (EUCS).

Although AI will spur major corporate advances, data privacy, location, and other strategic concerns are necessary.

Alan states: "Regulators have also been closely examining cloud usage in the last few years, particularly with regard to the risk of cloud concentration in the European Union."

Such actions show that authorities are trying to reduce risk and seal supply chain vulnerabilities, and they are keeping a closer eye on the changing threat picture.

"It's becoming more and more evident that maintaining a secure hybrid, multi-cloud environment is crucial."

A Sovereign cloud strategy: the next step

Alan thinks that implementing a sovereign cloud strategy is essential to safeguarding important business services in hybrid multi-cloud systems. This cloud operating model may guarantee that financial institutions maintain data security while staying ahead of local needs. It is intended to assist organizations in meeting their legal, regulatory, and operational requirements in a particular country.

"Regardless of the data's physical location, sovereign cloud also gives businesses the power to exercise control, make decisions, and enforce legal and regulatory obligations related to data," he says.

Furthermore, according to Alan, using industry-specific clouds helps businesses in all regulated sectors strike a balance between innovation and compliance.

"To help them manage mission-critical workloads, financial institutions need an enterprise-grade platform with built-in security and controls," the author states.

Businesses are able to concentrate more on achieving actual business results by automating these controls. The IBM Financial Services Cloud Council, a network of CIOs, CTOs, CISOs, and risk and compliance officers from more than 100 international financial institutions, provided guidance for the development of the highest regulatory and compliance standards, which went into building IBM Cloud for Financial Services.

Today, IBM's enterprise-grade platform is optimized to support mission-critical workload management while prioritizing resiliency, performance, security, compliance, and total cost of ownership for organizations in highly regulated industries, such as financial services, healthcare, telecommunications, and government.

In the end, laws might be difficult to follow, but they should be seen as necessary to promote safe innovation, says Alan.

"The goal of most, if not all, data regulations is to provide businesses and customers the peace of mind that their data is always secured. Building trust and transparency requires cooperation from all of us, including cloud providers, organizations, and regulators.

We examined earlier this week what positions IBM as one of the top providers of banking technology by 2024.