Brexit, Banking & the Cloud: What’s next?

Author Prodosh Banerjee on 16 November 2016 Prodosh Banerjee's blog

That Great Britain will leave the European Union is certain – what is less certain, however, is how Brexit will proceed and what it will mean for British companies that conduct a large part of their business in the rest of Europe. Especially for the financial industry, which is increasingly voicing its departure from London. This step also has consequences for the Cloud strategies of the banks. 

Many banks have already developed detailed emergency plans that assume a worst-case scenario. For observers and experts, this occurs when the agreements between Great Britain and the European Union no longer contain the so called “passporting” rule following Brexit.  “Passporting“, which was introduced in 1993, allows British banks, insurance companies, and asset managers to offer their services throughout the entire EU without restrictions.

A Brexit without passporting means that many banks will have to relocate at least part of their business to continental Europe in order to provide secure services to their existing customers. Anthony Browne from the British Bankers Association said: “Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.“

Such a step also calls into question the IT infrastructure setup of financial services providers. Over the last several months and years, many Cloud providers focused on opening additional datacenters in Great Britain as the demand for Cloud services significantly increased, particularly in the financial industry.  Today, the many questions regarding the ramifications of Brexit have led to great legal uncertainties for local solutions, and IT managers of banks must evaluate secure enterprise Cloud solutions in central Europe, preferably close to the financial centers there, such as Frankfurt or Zurich.

Thus, many in the financial sector today are convinced: for many banks and financial services providers, this path – the migration to the safe data haven of Switzerland – remains the best strategy long term to ensure uninterrupted services in the Cloud, as well as compliance with regulatory statutes and privacy policy guidelines for their business.