Capital Markets Firms Embrace Cloud Transformation

Cloud adoption in capital markets is gathering momentum, led by the increasing acceptance of the cloud by regulators as well as cost cutting at financial services organizations.

Indeed, regulators themselves are some of the enthusiastic adopters. Earlier this year the UK Financial Conduct Authority (FCA) decided to host its MiFID II transaction reporting system in the cloud and then, in July, published new guidance on cloud adoption.

“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," the FCA said.

This has been followed by a raft of other announcements with the Monetary Authority of Singapore issuing guidance in July, the US’ DTCC moving its Avox Data services to Amazon Web Services cloud, and DBS bank looking to move half its computing capacity to the cloud within 2 years.

The pros and cons of the cloud are well documented, but what is behind the sudden surge and what does it really mean for banks?

With large-scale transformation programs on the agenda, many firms find  it hard to rapidly deliver change in a leaner organization that is weighed down by regulatory burden and legacy technology. This is where the cloud can help facilitate their transformation; freeing up resources, eliminating lengthy purchasing processes for new equipment and speeding up software development and deployment.  

Yet, many financial services firms remain wary of the cloud. According to a survey on cloud usage in financial services by the Cloud Security Alliance (CSA), the most common concerns relate to security, compliance, and privacy. Acceptance, guidance, and adoption from the regulators will obviously help allay these fears. As should the added cloud benefits of flexible infrastructure capacity, reduced time for provisioning and reduction in total cost of ownership.

For the larger sell-side firms with onerous procurement processes, flexible scaling makes it significantly quicker to grow or shrink capacity as required. For the buy-side the availability of high performance computing and advanced technologies as services helps to level the playing field and enables them to adopt new technologies. Fintechs are benefitting from greatly reduced start-up costs, enabling them to go-to-market much quicker.

The cloud is a great place to be, but there are many other considerations to be addressed, such as:

• What to migrate to the cloud; having a clear picture of existing IT infrastructure, costs and support requirements is vital to maximizing the benefits of  cloud
• Integration with on-premises applications, across cloud (both private and public).
• Analytics; the ability to gain insight from and react to data that resides both on premise and in the cloud. In real-time!
• Processes; the need to manage processes that span systems regardless of where they reside.

What could greatly help firms is a single digital business platform that offers all of these capabilities, on premise, in the cloud, and a hybrid of the two, enabling firms to transform their business in an agile fashion and at the pace required to stay ahead of the curve. Get onto the cloud, but keep your feet on the ground.