Cloud computing is a technology that uses computing resources in a way that can be automatically expanded according to demand through the network, and allows customers to pay according to their usage. Different from traditional computing dominated by proprietary data centers, cloud computing involves relatively standardized services that a service provider provides to many different customers on a large scale. From non-critical services such as e-mail management and application development to core functions such as payment processing and data storage; Various financial institutions represented by banks and asset management companies are currently using cloud services.

Effective regulation and supervision of cloud use by financial institutions: (1) provide the background for financial institutions to use cloud computing, as well as relevant advantages and risks; (2) Review the current regulation and its structure of financial institutions using cloud computing; (3) Three measures and suggestions to reduce the cloud computing obstacles in a wide range of financial institutions.

Application background of financial institutions and cloud computing

From data center to cloud technology

In the 1950s, with the advent of the first large-scale commercial computer, banks began to use computers. Many years later, to the 1980s and 1990s, banks gradually used personal computers and information technology data centers alternatively to replace the old terminal technology. Now, in order to meet the growing demand for information technology (IT) and provide customers with more innovative high-quality remote and mobile services, financial institutions have begun to shift from proprietary IT infrastructure to cloud computing. According to the analysis and industry research of the U.S. Treasury Department, the migration of core financial service activities to the cloud will greatly increase due to the need to process large amounts of data and provide mobile priority digital banking services in the next decade.

（2） Cloud service model

The nature and extent of the control and risk borne by financial institutions when using cloud services depend on the service model they adopted. Cloud services can be divided into three basic models: infrastructure, software and platform. Infrastructure-as-a-service model involves the use of computing infrastructure, such as the server, storage capacity or network; The software-as-a-service model allows customers to run software developed by third-party service providers on remote ECS; Platform-as-a-service model can provide more structure than infrastructure model, and is more flexible than software model. It supports customers to develop and use software on the development infrastructure provided by application hosting and cloud service providers. The choice of service mode by financial institutions depends on their own needs and technical capabilities.

（3） Private cloud and public cloud

In addition to different service models, cloud providers also provide different deployment models. "Private cloud" refers to cloud resources dedicated to a single customer, while "public cloud" involves the use of standardized and commercialized cloud infrastructure by multiple different customers. This paper mainly focuses on the use of public cloud, that is, the infrastructure use of computing resources owned, managed by a third party and shared with other customers. There are two reasons: (1) public cloud provides the unique benefits of standardization, commercialization and corresponding economies of scale; (2) The relationship between financial institutions and public cloud providers is fundamentally different from the traditional outsourcing relationship - financial institutions use the public cloud to share computing resources with thousands of other customers from different jurisdictions.