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Challenger bank OakNorth is putting core systems in the Amazon Web Services (AWS) cloud after agreeing a cloud policy with the regulator.
OakNorth, which got its UK banking licence in March 2015, targets lending at high-growth small and medium-sized enterprises (SMEs). It hopes to differentiate through technology and by allowing SMEs to secure loans through assets other than property.
The bank said it is the first cloud-based bank in the UK. The announcement comes after working with supplier AWS and the Financial Conduct Authority (FCA) for six months on policies related to access to data, business continuity and security.
The move to the cloud comes eight months after the bank launched and will help it scale with fast-growing demand. OakNorth said it has lent more than £120m since it began taking deposits and lending in September 2015.
“Having our core banking system based in the cloud is an important milestone for us and for the banking industry in the UK,” said OakNorth CEO Rishi Khosla. “This achievement will enable us to continue scaling the business safely and efficiently.”
“The Financial Conduct Authority proposed new guidance on cloud and other IT outsourcing in November 2015 to promote innovation and competition in the sector. This development is proof of the regulator’s willingness to do that, and it will open up the opportunity for other financial institutions to follow suit,” added Khosla.
In December 2015, the FCA said it had no fundamental opposition to finance firms using cloud technology, including the public cloud.
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“We see no fundamental reason why cloud services – including public cloud services – cannot be implemented, with appropriate consideration, in a manner that complies with our rules,” said the FCA guidance.
GavinJackson, AWS country leader of Amazon Web Services UK, said this demonstrates that even highly regulated industries are entrusting critical systems to the cloud.
It is not just new startup banks looking at the public cloud. Australia’s Commonwealth Bank of Australia (CBA) moved its online banking service into the Amazon Web Services cloud in 2012.