Proponents of the UK's direct regulatory model argue that it is the only way to address the reality of modern financial infrastructure. Because banks now rely so heavily on a small number of cloud providers, these tech companies have become the new 'too big to fail' entities. If a major cloud platform experiences a prolonged outage, the entire financial system could grind to a halt, affecting millions of consumers and businesses simultaneously.
By bringing these firms under direct oversight, regulators can ensure that they meet high standards for operational resilience before a crisis occurs. This proactive approach allows authorities to inspect systems, demand transparency, and enforce security protocols that individual banks might lack the leverage to negotiate on their own. It creates a standardized safety net that protects the entire market rather than relying on the fragmented efforts of individual financial institutions.
Furthermore, direct regulation provides a clear legal framework for accountability. When tech giants are treated as critical infrastructure providers, they are held to the same high expectations as the banks they serve. This alignment of responsibility ensures that the entities controlling the digital pipes of the economy are as invested in stability as the financial institutions themselves, ultimately fostering greater public trust in digital banking services.