Hardly any other industry is subject to stricter regulatory requirements than the financial sector. This poses many challenges for providers of financial services that want to migrate their sensitive data and applications to the cloud. To make the journey to the cloud more secure, SAP teamed up with Deutsche Boerse, an international exchange organization and market infrastructure provider, to create a solution: a framework for the secure, compliant hosting of sensitive financial data in the cloud.

Many players in the financial sector are still far from moving to the cloud. As one of the first companies, Deutsche Boerse is deploying this technology by running a multi-cloud strategy and migrating core business processes to the cloud, encouraging innovation and agility.

“When moving to the cloud, we need IT solutions that give us full control as well as ensure data sovereignty and the protection of sensitive financial data, which is a top priority,” says Dr. Christoph Boehm, CIO, COO, and member of the Executive Board of Deutsche Boerse Group, about the central challenge.

Without this, the company would not be able to meet the strict regulatory requirements and respond to market changes flexibly. The cloud technology delivers decisive advantages for Deutsche Boerse.

“Time to market and scalability are crucial factors for financial service providers – and the cloud is the best way to ensure that they’re provided,” says Luka Mucic, chief financial officer and member of the Executive Board of SAP SE. “It represents the heart of intelligent technological innovations.”

The sheer size of the computing and storage capacities combined with the tremendous reliability and agility support moving to the cloud.

Financial Service Providers Aim for the Cloud

As such, it is understandable that enthusiasm for the cloud is growing in the banking sector, as evidenced in a recent PwC study. According to the study, 78% of German banks are already using cloud services, 25% more than in 2018. And around half of the banks that are not using cloud services now plan to do so in the foreseeable future.

This comes as no surprise to Karsten Wilop, PwC expert: “Cloud technologies are an essential prerequisite to driving and successfully shaping digital transformation.”

Although hyperscalers like Google Cloud, AWS, Azure, and others are considered important pioneers of innovation in the financial services area, banks are still very apprehensive. Right now, financial service providers primarily use cloud computing environments to process non-critical data only. According to the PwC study, this is due to high demands for security (82%), fear of compliance violations (53%), and unclear regulatory requirements (49%).

With its intelligent enterprise strategy, SAP is paving the way to the cloud – and thus to innovation – for financial service providers. Together with Deutsche Boerse, SAP has developed a framework for compliant use of the cloud in the tightly regulated financials domain. It is based on SAP Data Custodian and works to simplify the hosting of sensitive data and SAP workloads in the Google cloud, aiming to help financial service providers drive innovation forward more quickly.

“This solution lays the foundation for efficient risk management in the cloud – without sacrificing speed or scalability,” says Boehm.

The SAP Data Custodian solution lets banks decide for themselves which data center they want to use to store and process their data. The application also gives users detailed reports on accessibility and movement of data. Proactive warnings help identify potential security breaches and policy violations quickly, while innovative encryption concepts guarantee maximum data protection.

“SAP Data Custodian ensures that the cryptographic keys are known only to the financial services provider. The respective hyperscaler has no access to them,” emphasizes Mucic.

SAP Data Custodian Supports Higher Security During Cloud Migration

Specifically, this means financial service providers can not only have full information as to where their data is stored in the globally connected cloud and who accesses it; they can also benefit from reliable policies for storage management as well as flexible access. As such, the blueprint represents an ideal starting point for the financial sector to move to the cloud. Many companies want to migrate to the cloud or use cloud solutions from SAP but still have concerns about data protection and compliance.

“SAP Data Custodian gives these companies in particular a level of security that was previously only available in on-premise environments. Our proof of concept with Deutsche Boerse shows that cloud applications can meet even the high compliance requirements of the financial industry,” Mucic says about the value added by this high-performance solution. It can lay the foundation for reliable data security in cloud scenarios and is available for all hyperscalers.

In the medium term, SAP Data Custodian aims to become the central solution for access transparency and control for cloud solutions in the financial sector — and other industries too.

To find out more about the new, secure hosting of sensitive financial data and SAP workloads in the public cloud, watch a replay of the SAPPHIRE NOW session: Seventh Heaven for Hosting Regulated Data and Workloads in the Cloud. In this joint session, Boehm and Mucic present the proof of concept in detail and encourage other companies acting in regulated industries that aspire to migrate to the cloud.