Topic: Financial institutions

The financial services sector is becoming increasingly reliant on cloud service providers (CSPs) to fulfil its growing data processing and storage needs. Financial services providers in the United States have reportedly had the highest levels of adoption, operating 54 percent of their workloads in the cloud; and according to the European Central Bank, banks spent 13.5 percent more on cloud outsourcing in 2024 than in 2023.

The European Banking Authority (EBA) is currently consulting on its draft guidelines on the sound management of third party risk (Draft Guidelines), which are intended to replace the 2019 guidelines on outsourcing arrangements (2019 Guidelines).

Financial regulators globally emphasise the importance of financial entities being operationally resilient, which includes the ability to manage and recover from disruptions caused by their service providers. The topic receives significant attention in the financial services sector because the sector is regulated, with the aim of promoting financial system stability.

Most incidents handled by our Norton Rose Fulbright cyber team originate from the customer’s service provider. In many cases it is the service provider’s systems, infrastructure and environment which proves to be the most vulnerable to cyber breaches and security issues.

The latest instalment in the Tulip Trading v Bitcoin Association litigation has been greeted with relief by many in the blockchain community, after the High Court threw out a claim that bitcoin developers (including several bitcoin forks) owed a duty of care or a fiduciary duty to an alleged owner of bitcoin.

Regulation of artificial intelligence is on the way in many regions across the globe. The EU Commission has proposed an AI regulation that would apply to financial institutions, and governments elsewhere are considering their own regulatory responses.

Director Quentin Tarantino recently announced that he would be auctioning as non-fungible tokens (“NFTs”) excerpts from the original handwritten screenplay of the 1994 film Pulp Fiction.

What happens when electronic cryptocurrency platforms do not function properly or the platform operators work against their own users?

While providing the opportunity for greater efficiency and revenue, better qualified personnel and improved risk management and compliance, there are important ethical and security risks that banks need to properly manage if they elect to use AI.

This blog post examines the Payment and Electronic Money Institution Insolvency Regulations 2021 which provide for a new special administration regime for payment and electronic money institutions.