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Cloud Computing - the game-changer for Capital markets


Cloud Computing Introduction Image

Introduction to Cloud Computing

Capital market companies were early adopters and developers of software platforms & algorithm programming for quantitative analysis, stock trading, fund management, etc. Today, technology has evolved with the adoption of cloud computing, artificial intelligence (AI), big data analytics becoming mainstream. Having realised the competitive challenges, leading capital market companies drive business transformation with technology as the core.

 

Cloud Computing focuses on management-level discussions, not only from an infrastructure change and cost efficiency perspective but as a scalable and flexible platform for future growth. Goldman Sachs recently launched Marcus digital bank, built on a public cloud platform with institutional investors as its core customer segment. With $60 Billion deposits, such business transformation debuts are successful only if the foundation and the organization behind it support the model seamlessly.

 

Public cloud platforms, the backbone of business transformation, offer a range of off-the-shelf services that foster an innovation mindset and accelerates the process from ideation to delivering business value. Cloud adoption in capital market firms allows companies to reimagine their operating model, improve revenue generation, increase cost efficiencies, monetise data, build new products/services and enhance insights into business performance. Further, Cloud computing provides a narrative for laggards and aspirants stepping into their cloud journey.

Here are five key impact areas:

work from anywhere model

Business resiliency and work-from-anywhere models

With the pandemic creating a unique working environment, Cloud has become critical to the Business Continuity Plan (BCP). DTCC defines it as the ‘BCP test of the decade’ and observes that organizations have responded effectively with entire Operations and technology teams working remotely. Financial firms’ specifically will consider it a significant part of their recovery strategy, resulting in an emergence of a hybrid working model.


Breaking organizational silos

Organizational silos are created with structure, people and disconnected data. Hence, business decisions should not focus on only one dimension. Cloud platforms help create an integrated platform with common datasets that are connected for deriving insights. It enhances collaboration among business units and also increases the speed & quality of decision making. Capital market firms can employ cloud-based analytics and machine learning solutions for better placement, stock analysis & trade cost analysis across departmental data sources within enterprises, and partnering with peer firms for monetised data.


Enhanced security and regulatory compliance

enhanced security

In the past, security concerns were the primary reason that Capital market firms and other financial services companies shied away from the cloud. Today, things have changed with public cloud providers investing heavily in establishing regional data centres with specific compliance regulations. They are also open to supporting hybrid and multi-cloud models. The Financial Industry Regulatory Authority (FINRA) – an organization set up to protect investors and ensure market integrity – is setting the trend in financial companies by comprehensively adopting the cloud. FINRA employs data analytics services applied by AWS to uncover insider trading and other strategies which gain an unfair advantage across 75 billion market events daily.


Flexible and open technology architecture

Collaborative, flexible operating models across financial companies (such as open banking) are created by breaking the monolithic architectures in microservices and building API based architectures that allow integration across systems and simplify data sharing. For instance, Monex (a Japanese online securities firm) initially created an API based investment services app to address internal challenges and reduce time-to-market. Monex then realised the possibility of creating new opportunities and opened its APIs to its partner ecosystem. It aims to become an integrated services hub for the financial services market in Japan.


Data-led innovation

data-led innovation

Data is critical to any business today as it fuels innovation, especially in capital markets. Data and analytical reasoning must support all decisions related to investment choices, fraudulent transactions, etc., as they have direct financial or brand image implications to them or their customers.


With a team of 40 data scientists and an advanced data science laboratory, DNB created a Multicloud. It integrated different business units and helped create innovative data-driven products that provided a market analysis and benchmarking to small and large businesses. This investment enabled them to respond better to the pandemic, and its aggregated insights helped the Norwegian government assess the crisis impact and remediating policies.


Cloud computing in the capital market industry is proving to be the game-changer, and investments in cloud computing & advanced technologies will soar in coming years. While there is a focus on technology investments, there must be deliberate efforts on people development and organizational operating model changes to sustain and succeed throughout the cloud journey and NSEIT can definitely help you with this.


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