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

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11 December 2016
Brad Bailey Arin Ray

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.

Key research questions

  • What are the cloud deployment models in the capital markets ?
  • What are the emerging capital market use cases ?
  • What are the key challenges for moving forwards with cloud service and managed offerings ?

Abstract

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.

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