The Cloud Comes of Age in Capital Markets: All Clear for More Cloud

by Arin Ray,  Brad Bailey, December 12, 2016
Industry Trends
Global

Abstract

Celent has released a new report titled The Cloud Comes of Age in Capital Markets: All Clear for More Cloud. The Colt-sponsored report was written by Brad Bailey and Arin Ray, both with Celent’s Securities & Investments practice.

The appetite for cloud-based services in capital markets has reached a critical point and cloud is set to become the main delivery model for certain key functions in the near future.

Cloud adoption is being driven by four key factors in the capital markets: cost pressures, flexibility in creating new and rapid solutions, demand for flexible infrastructure and managing and leveraging data in the most effective fashion possible. These factors are further driven by regulatory challenges, macroeconomic uncertainty, and the rise of fintech. The cloud has emerged to solve these challenges, offering firms a more agile infrastructure that enables them to address ever evolving regulatory requirements and the proliferation of trading applications as well as the need to rapidly connect to multiple liquidity sources.

There has been a wider acceptance for moving non-core and non-proprietary data to a cloud environment, the move of front office functions and proprietary or client information has lagged behind. However, this attitude is shifting as firms become more comfortable with the performance and security of the cloud.

The capital market space is also seeing a parallel emergence of the need for better connectivity to support secure cloud deployments. Private, dedicated cloud access is better suited for capital market requirements, offering better speed and latency as well as superior performance and security.

“The conversations around cloud adoption are quickly moving beyond security, to  performance and how best successfully deploy a solution that complies with regulations, and these concerns are common to all technology solutions, cloud-based or not. We are seeing institutions alter their attitude from ‘never’ to ‘how to’ embrace the cloud,” says Bailey, a Research Director.

“Whenever there is a need to build new solutions or replace existing ones, we invariably see cloud being the most preferred model because of low costs of failure, and high flexibility and scalability of the cloud. This should lower the barriers for legacy migration in the longer run paving the way for greater cloud adoption,” says Ray, an analyst.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Findings

1

 

Key Research Questions

2

 

About this Research

3

Introduction

4

 

A Brief Overview of Cloud Models

7

Models for Delivery and Distribution in the Capital Markets

8

 

Cloud Service Models

10

 

Cloud Deployment Models

11

 

Cloud-Based Managed Service

12

Cloud Acceptance in the Capital Markets

14

Reaching the Cloud: Connectivity and Accessibility

18

 

Internet

19

 

Private Network

19

 

Managed Connectivity Service

20

Capital Market Use Cases

22

 

TradingTech as a Service

23

 

RegTech as a Service

24

 

Market Data as a Service

24

Challenges in Cloud Adoption and the Way Forward

26

 

Overcoming the Challenges

28

Conclusion

30

Leveraging Celent’s Expertise

32

 

Support for Financial Institutions

32

 

Support for Vendors

32

Related Celent Research

33

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