The Cloud and Capital Markets: Tomorrow’s Leaders Will Leverage Today’s Cloud for Growth


“The Cloud.” The term conjures up images of a utopian technology world. A plug-and-play technology stack where applications, data, and workflow integrate seamlessly. But dropping a single application into the cloud doesn’t solve the challenges of legacy code or connectivity with disparate applications with various reference databases and integration formats. As a result, the realities to date largely haven’t met some of the unrealistic expectations the promise of the cloud created. Firms need to define a cloud strategy that delineates between cloud-native and merely hosted applications and takes into account the implications for the broader technology strategy. Aite-Novarica Group believes the cloud is an essential part of growth strategies for the securities and investments industry and that the benefits, which follow, are too compelling to ignore:

  • Security: Firms are past the point of debating whether the cloud provides equivalent security to locally deployed solutions. Amazon Web Services (AWS), Google, Azure, and others have proved their security is superior to that of individual industry participants.
  • Operational resilience: As regulators worldwide focus on the capabilities of institutions to support a variety of events, the cloud offers robust disaster recovery capabilities, scalability, 24/7 access from anywhere, and cloud-native applications that support data integrity and a single source of clean data as well as “audit trail by design” functionality.
  • Talent acquisition/retention: Acquiring and retaining expertise remains a top-of-mind challenge for the industry. Modern cloud technology can play a significant role in becoming a more attractive employer to technology users and developers.
  • Development accelerators/cloud partnership: Cloud providers themselves are building accelerators and supporting a growing number of third-party integrations that support accelerated development. Cloud providers are also approaching clients with business-needs-based solutions and a growing portfolio of best practices and use cases.
  • Cost of ownership: Cloud providers offer the scale to support lower costs when compared with the fully loaded costs of buying, supporting, and upgrading hardware, software, data centers, and people.

But the cloud doesn’t wield a magic wand, so industry participants need to have a strategy and build to a technology vision to realize its full potential. Putting applications or data in the cloud doesn’t magically solve application or data integration. Applications that have undergone a “lift and shift” fail to take full advantage of the full benefits the cloud can offer. Integrating a hosted application with data sources and applications both upstream and downstream that remain deployed or hosted with other cloud providers creates technology mismatches. These mismatches generate suboptimal results and mixed perceptions of the transformational capabilities of the cloud. For this reason, firms need to carefully consider their approach and understand the technology strategies and capabilities of their solutions providers to optimize the benefits of the cloud. Ask these questions:

  • What cloud providers does the application leverage? Cloud providers bring specific capabilities. Azure brings the broader capabilities of Microsoft’s desktop, server, and customer relationship management solutions; AWS offers proprietary tools, such as Redshift, or the integration of acquired best-of-breed tools such, as Tableau; Equinix offers security and connectivity as a leading private-cloud provider to the capital markets industry. What technology, partnership, or other benefits led to the choice of a cloud solution?
  • Is it cloud-native? Cloud-native applications can take advantage of the cloud provider’s full capabilities, integrations, and accelerators that “lift and shift” solutions locked in existing technology architectures will find more challenging to integrate and support.
  • Is it multitenant? Multitenant applications create tighter controls around customizations, engage in more frequent or continuous release cycles, and tend to support more robust flexibility around application configuration.
  • What is the integration strategy? The nature of the securities and investments industry is one of disparate systems up and down trade life cycle. Robust APIs and a strong partner strategy, including out-of-the-box connectivity tools for surrounding systems and data, is critical to ensuring data integrity. This approach also lowers the cost of ownership by minimizing custom integrations and the additional cost and complexity these bring to maintenance and upgrade cycles.
  • How does it support your technology strategy? As market changes accelerate, Aite-Novarica Group sees firms prioritizing outsourcing and the simplification of their technology stack through systems consolidations and applications that support front-to-back trade life cycles. Does the approach and solutions your firm is looking to deploy support your business and technology architecture strategy?

Aite-Novarica Group believes the securities and investments segment needs to actively embrace its cloud strategies. Realizing the full potential benefits of the cloud will require a clear business and technology strategy coupled with the right application decisions. Firms that align their business and technology architecture to achieve this are positioned to build a competitively differentiating platform that supports the acquisition and retention of clients and employees as well as creates a scalable foundation for growth.