08.08.2011
By Terry Flanagan

Hovering Above the Clouds

The capital markets sector is attempting to shed pockets of inefficiency that have cropped up over the decades in response to regulatory, market and technological changes. Financial firms are in effect saying they’ve had it with the high fixed costs and the bloated operational spend that are embedded in the investment process.

The latest solution is to lift this entire high-cost infrastructure into the cloud, where hardware and software resources, applications, and market data can be distributed, shared, and leveraged.

“The effective use of collaboration is a critical competency in the financial industry and will allow the creation of value through efficiencies,” said Paul Stapleton, senior vice president of information technology at Dundee Securities, a Toronto-based wealth management and investment adviser.

It may be a farsighted notion, but adherents say that the mission is achievable and in fact has already begun. “Technology and cloud service providers are maturing at a rapid rate,” said Roy Flint, head of global infrastructure at information-services provider Markit.

To be sure, cloud computing is a deep dive, requiring investment in skills and technology and the creation of horizontal services.

“To build a cloud environment that truly scales requires serious engineering and total commitment from the business, not just the technologist,” said Flint. “Firms need to ask themselves, do they have the appetite, patients and dollars for the up-front capital commitment?”

For those firms that answer yes, the cloud model is reshaping the way they approach traditional functions, just as it has affected some areas of everyday life.

“We are seeing technology, particularly consumer-oriented technology, such as web portals and mobile apps, driving all aspects of our lives,” said Rahul Kanwar, senior vice president and managing director of SS&C’s alternative assets business. “This includes social networking, financial self-services, how we get news and how we digest and consume any form of information.”

SS&C’s recently launched SSCFundServices.com fund administration platform is an archetype of cloud computing. The impetus behind the cloud-based portal is to take the data that SS&C maintains in internal systems and expose that to clients over the web and via mobile applications such as the iPhone and iPad.

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