New EBA Outsourcing Guidelines: What SaaS is Considered Critical or Important?

We dig into the jargon behind the regulation to help you understand what needs to be done with your SaaS
New EBA Outsourcing Guidelines: What SaaS is Considered Critical or Important?

“Critical or important” might seem like day-to-day words, but when it comes to cloud software, they have just acquired a very important meaning. In this post, we will explain how it affects you and what you can do to take action.

New upcoming regulations: EBA Outsourcing Guidelines

If you are a financial institution (yes, fintech startups too) you are almost certainly in the list of affected companies.

By December 2021, almost every financial institution in the UK and Europe will need to comply with the new Outsourcing Guidelines passed by the European Banking Authority (EBA). This means that most regulated fintech companies will have to introduce risk management and compliance processes for the SaaS they use and many other things they outsource by next year.

For more information about the guidelines, click here.

Classification of your software stack

Although the guidelines apply to all of your cloud software and you will need to run a compliance process for all of your SaaS, certain types of SaaS will require deeper diligence. And, you’ve guessed it, that is SaaS classified as “critical or important” for your business.

How do I know what software is critical or important to my business?

First of all, it is important to understand that what is considered as "critical or important" will vary across companies. In other words, what is “critical or important” for one firm may not be for another.

Regarding the article 13(1) of the MiFID implementing Directive, “an operational function is regarded as critical or important if a defect or failure in its performance would materially impair the continuing compliance of a common platform firm with the conditions and obligations of its authorisation or its other obligations under the regulatory system, or its financial performance, or the soundness or the continuity of its relevant services and activities.”

That is the official definition.

In plainer words, if the failure of the technology in question results in a disruption to your business, and in failure to provide your services or the inability to support your customers, it may be considered as “critical or important”

If you are still in doubt, maybe an example will clear things up. So if you are a neobank, these are some of the tools that you might want to consider as “critical or important”:

  • Your CRM (i.e. Pipedrive)
  • Your customer support software (i.e. Zendesk)
  • Your single session and user authentication service or SSO (i.e. Okta)
  • Your PEPs and sanctions screening tool (i.e. ComplyAdvantage)

On the other side, it is likely that your analytics (i.e. Google Analytics) or your internal communications (Slack) software would not be regarded as critical or important.

This looks exhausting… Is there any way of skipping this process?

Even though we normally get no for an answer, we all like to ask ourselves the same question.

But this time… we’ve got good news!

Cledara has just introduced a new SaaS compliance tool. What this means is that we will take care of this process, and make it simple and easy for you. Check it out at our webpage, or book a demo of our product! We will be very happy to show you around and adapt to the needs of your business.

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This post was inspired by questions provided by people like you. We love receiving new and interesting questions that help us think about data in new ways.  If you found this post interesting and have other questions that you’d like us to help answer, drop us a line at

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Jenny Liu
Director of Finance @ Napo