Regulating the Cloud: A Necessary Step, But One That Raises Questions

The handover of powers to regulate key tech firms, including Amazon and Google, has been years in the making. The Bank of England’s new oversight role will allow for direct scrutiny of cloud services used by banks across the UK.

This move is a response to the growing risks associated with relying on foreign firms for critical infrastructure. The recent Lloyds outage last October highlighted these risks when a glitch at Amazon’s Northern Virginia facility brought online services to a halt for thousands of companies, including Britain’s main banks and building societies. This incident was not an isolated case; customers suffered from more than a month’s worth of IT failures between 2023 and 2025.

The Treasury committee has highlighted the scale of this problem, emphasizing its impact on financial stability. The UK government’s decision to grant regulatory powers to the Bank of England is a welcome step towards mitigating these risks. However, it also raises questions about where to draw the line in regulation.

Meg Hillier, chair of the Treasury committee, has called for consideration of putting AI firms under regulatory watch. This suggestion is reasonable given the increasing reliance on artificial intelligence in financial services. As AI expands its presence, regulators will need to consider designating specific AI firms as “critical third parties.”

The tech giants themselves have publicly welcomed the announcement. Amazon and Google stated their support for boosting the resilience of the UK’s financial sector. However, this move also raises questions about the role of foreign firms in shaping our financial infrastructure.

Critics argue that the UK government has been hesitant to take action due to concerns about attracting investment from big US tech firms. This is not just an issue of national security; it’s also a matter of economic sovereignty. As the UK grapples with the aftermath of Brexit, there are many competing interests at play.

The decision to grant regulatory powers to the Bank of England is a step towards reclaiming control over our financial system. However, it’s only a first step. The future of tech regulation in the UK remains unclear. Will the government prioritize attracting investment from foreign firms or take a more proactive approach to regulating the tech sector?

One thing is certain: the stakes are high. As we move further into an era of increasing dependence on cloud computing and artificial intelligence, it’s imperative that regulators keep pace with these developments. The recent announcement has sparked debate about the role of AI in financial services, and the Treasury committee chair’s call for consideration of designating specific AI firms as “critical third parties” is a timely reminder that this issue will not go away.

The complexities of regulating the modern banking system demand close attention to the tech giants and their influence over our financial lives. The Bank of England’s new oversight role may be a necessary step towards mitigating risks, but it also raises questions about the limits of regulation in an increasingly complex world.