Today’s investment banks, private equity, and venture-capital firms face challenges such as low-interest rates, stringent regulations, sluggish legacy infrastructure, and more and more capital requirements with high-margin pressure. Adding to the pressure on capital market firms are FinTechs and BigTech players working to gain an edge based on their agile use of technology.
Within such a complex environment, capital market firms must take steps to stay relevant. First, services need to be improved, starting with a better understanding of changing client preferences. With an eye on the future, strategic firms are collecting complex customer data and turning to analysis for insights. Better data analysis capability would help firms access real-time customer data to understand their preferences. However, firms are facing high capital expenses and are looking for solutions that fit within an already tight budget. To make matter even more challenging, firms must comply with changing regulatory requirements.
Migration to the cloud could provide an efficient way to address all these challenges.
Banks leverage public cloud to reduce infrastructure costs
The cloud can bolster a firm’s agility by allowing it to pay on demand. Banks can scale data storage up or down in the cloud, based on their needs. It’s not surprising that so many financial institutions are shifting to cloud technology for their applications, as well as balancing customer-facing and back-end process priorities. Based on their security requirements, firms now have options when it comes to the type of cloud storage they use – public or private.
Interestingly, research shows that public cloud investments will consume 47% of capital market firms’ IT budgets by the end of this year, ranging from small hedge funds to large banks. Based in Singapore, multinational DBS Bank partnered with California-based data center specialist Equinix in late 2017 to transform a traditional data center into a cloud-optimized center. The initiative is enabling the bank to move its primary data center to a location that is a quarter of the size of its existing site and 75% cheaper to run.
Insights from cloud analytics and data security can drive better product creation
Firms across the globe have been affected in the aftermath of the May 2018 implementation of the EU’s General Data Protection Regulation (GDPR). The rule gives citizens more control over their personal data, and cloud technology enables banks to safely store data so access can be easily granted or revoked across service providers. Firms also get to analyze saved data with the help of cloud-analytics services. It works by consolidating massive data and generating insights. Moreover, firms can leverage data mining and advanced analytics to create prediction models on consolidated data.
Firms can implement compliance as service over the cloud
Cloud can help capital market firms meet ever-changing regulatory requirements. Compliance team can automate the process of checking legal and security obligations over the cloud. The result is a system that continually monitors regulatory changes versus relying on periodic review. Cloud technology offers the option to push compliance and security test automation into the software development process with the potential to prevent policy violations before they reach production. Cloud strategy can foster a proactive culture that regards compliance and security as value-added customer-centric activities.
Cloud migration checklist
Once a firm decides to migrate to the cloud, it should evaluate specific parameters. The first and most essential step is to check the compatibility of its applications with its cloud provider. Lack of compatibility can affect the performance of applications post-migration. Public clouds could be hosted anywhere around the world, so for mission-critical applications, firms can opt for a private cloud with necessary security and infrastructure.
The benefits of migration to the cloud
To be prudent, firms need to draft a service-level agreement (SLA) that includes all possible scenarios and conditions. They should also set up a governance team to liaison with the cloud provider to understand changes and system updates. The governance team would follow up with the cloud vendor to create the SLA and update it as required.
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 Computer Weekly, “Capital markets firms to ramp up public cloud spending,” Karl Flinders, July 24, 2018,
 DBS press release, “First bank in Singapore to launch new cloud-based data centre,” November 13, 2017, https://www.dbs.com/newsroom/First_bank_in_Singapore_to_launch_new_cloud_based_data_centre.
 Medium, “3 Benefits of Automating Compliance in the Cloud,“ Thomas Blood, January 4, 2017, https://medium.com/aws-enterprise-collection/3-benefits-of-automating-compliance-in-the-cloud-666c18c2164a.