The UK’s Prudential Regulation Authority, which regulates financial institutions, is reportedly investigating Amazon, Microsoft, and Google, citing the reliance by UK banks on cloud computing.
The Financial Times reports that the UK is exploring how to extract information from the US companies to give it a broader picture of the risks and rewards of British banks outscoring their computing needs, suggesting the investigation has some way to go before its completion.
Amazon’s AWS, Microsoft’s Azure, and Google Cloud have all recently struck deals with UK banks, which are seeking to reduce costs, overhaul infrastructure, and make use of AI and other emerging technologies.
The FT adds the UK is considering increasing tests for outages and disaster recovery, an important stress test given the importance of the country’s financial sector both domestically and internationally.
The UK’s heightened interest is likely related to the recent and extended AWS outage, which reminded everyone of just how many websites use AWS. Pretty much every popular service uses AWS and that creates worries when issues occur.
While not being able to watch Netflix for a few hours isn’t the biggest deal, the UK financial sector crashing because an American company had an outage is likely something that regulators want to avoid.
The UK PRA is set to publish a report on UK banks and cloud service providers. Minutes from a meeting suggested that “the increasing criticality of the services that critical third parties provide, alongside concentration in a small number of providers, pose a threat to financial stability in the absence of greater direct regulatory oversight.”