Finance Warms Up to Cloud
The Financial Sector Comes Around to the Cloud
By Guy Warren, CEO, ITRS
After initial hesitation, the financial services sector is warming up to the potential of cloud computing. The use of private and public cloud is growing exponentially in the space. Why? It’s due to a number of factors coming together.
A better development and deployment approach
Not surprisingly, it was the large internet companies and SaaS providers, such as Facebook, Google and Amazon that were first off the mark when it came to cloud adoption and benefiting from the innovative opportunities that these new ways of working provide.
Benefits include being faster to market with new products or initiatives, and increased agility in their ways of working. By adding automation to their cloud processes, these companies have been able to garner benefits such as improved flexibility in capacity to manage peak demands, and hence greater uptime in availability of services, as well improved automation allowing reallocation of expensive staff resources to more value-driven tasks, rather than wasting time on the mundane or routine.
In the financial services sector, many have similar pain points and have been aware that they too can benefit from these more agile ways of working. However, they have been slow to move to the cloud due to concerns over security, especially because of the high sensitivity of their data, whether it is trading information or clients’ personal information.
The development processes and tooling used have evolved by learning from the trailblazers, taking note of potential pitfalls to avoid and good ideas that might fit their own requirements. This new development approach uses a combination of tooling and processes, including tools like Platform-as-a-Service (PaaS), Continuous Integration (CI) and continuous testing architectures, based on Service-Oriented Architecture (SOA) and deployment based on containerisation.
The production environment can be a fixed IT estate, or a dynamic cloud environment. This phased approach has largely allowed firms to tackle their concerns as they take their first steps into the cloud.
Peaks & troughs – efficient supply
Capital markets companies process vast amounts of information and run very time sensitive operations. Time is money, and delays in market data, trading execution, pre- and post-trade risk calculations and pricing, clearing and settlement and regulatory reporting are all highly time sensitive. In the world of fixed IT estates, time criticality meant that the production estate needed to be large enough to cater for the very busiest periods, even when these only happened infrequently (peak days in the month like non-farm payroll day, ECB announcement days, etc).
Combined with the need to hold a suitable Disaster Recovery (DR) capability, this translates into a large amount of heavily under-utilised computing power for most of the time. Typically, we are talking about servers running at less than 20% utilisation over 95% of the time. Datacentre space is expensive, so that translates to huge wasted cost.
Quicker and easier
Ease and agility are two of the major hallmarks of cloud. Like many other industries, financial services are changing rapidly. Cloud makes it easier to develop and deploy web-based solutions and mobile applications for the digital world. It makes it easier to centralise support services and maintain infrastructure and just generally respond to changing business needs without procuring new hardware.
The answer is in the clouds
By using the DevOps techniques together with the problems of under-utilisation, the trading companies are now starting to use more flexible environments which can grow in capacity when the demand is there, and reduce when it isn’t. Initially, there was concern about running the trading engines in the public cloud, but the growth of either in house cloud or private cloud means that security issues can be overcome.
Data centres have previously been described as complex, expensive and inefficient, but by adopting the cloud as part of their IT estate, businesses can benefit from the elasticity and ROI such a structure can provide, while maintaining confidence in being able to deliver constant uptime of services. What’s more, it doesn’t have to be a black and white, either-or choice: different systems can be migrated to the cloud gradually, reducing risk and diminishing fear of the plunge. That’s why the financial services sector is waking up to cloud.
US options market Nasdaq MRX will migrate to the cloud this year.
The deal shows the cloud is ready for the most mission-critical applications.
The expanded commitment will bring Nasdaq closer to moving its markets to the cloud.
RQD said it offers the first clearing platform built entirely on cloud-native, real-time technology.
Existing financial data management and analytics solutions are based on legacy technologies.