Seamless integration – Drivers of and barriers to cloud adoption

Siarhei Niaborski, executive vice-president of risk at CompatibL, discusses the rate of cloud adoption in the capital markets industry and its possible drivers and barriers, how firms can derive maximum value from cloud usage and the criteria on which firms should determine their choice of cloud model

 

To what extent are capital markets firms embracing cloud?

Siarhei Niaborski, CompatibL

Siarhei Niaborski: In the past, the capital markets industry lagged behind others when it came to cloud adoption. While the initially slow adoption rate of cloud technologies in capital markets was often attributed to the need to comply with regulations, other heavily regulated industries such as retail banking and insurance have historically had a greater cloud adoption rate than capital markets.

This trend is beginning to change, and capital markets firms are rapidly moving towards cloud adoption. They now see technology transformation as part of their strategic, long-term objectives.

As a software and services vendor, CompatibL is ready to collaborate with its clients in their cloud transitions. CompatibL has developed multiple cloud deployment options for its software – CompatibL Platform and CompatibL Risk – including on-premise, hybrid cloud and public cloud. CompatibL has also invested in making its software work with most mainstream cloud providers.

 

What is driving cloud use?

Siarhei Niaborski: The primary driver of cloud adoption in the capital markets industry is the increased demand for low-cost computational and storage resources that can be scaled up and down on demand according to the needs of the enterprise. The ability to rapidly provision new infrastructure drives firms’ ability to quickly respond to changes in the market, deploy new technologies and incorporate big data and new analytics into their business processes. 

By cutting the time it takes to deploy and scale their IT infrastructure – and avoiding the need to pay for excess capacity – cloud adoption helps firms better meet their business needs and gain a competitive edge in today’s challenging market environment.

 

How can firms maximise the benefits cloud offers?

Siarhei Niaborski: Firms may derive limited benefits from moving their existing in-house or vendor applications that were initially designed for the data centre to virtual servers hosted in the cloud without software re‑engineering and without utilising true serverless cloud technologies. In this Infrastructure-as-a-Service cloud deployment model, the firm retains full control over the servers and makes either limited or no changes to their software. However, this approach does not deliver the full power of the cloud.

To unlock the full potential of the cloud, the software itself must be re‑engineered around such cloud technologies as serverless computing, non‑structured query language (NoSQL) databases and cloud storage. Cloud benefits can only be maximised by fully embracing the cloud, incorporating true serverless cloud technology and tools into a firm’s application architecture, and demanding the same of the firm’s vendors.

 

What are the barriers to wider cloud adoption?

Siarhei Niaborski: In the past, the main barrier to cloud adoption was the lack of certainty and industry experience in complying with data protection regulations and internal policies when firms’ data – and, more importantly, their clients’ data – is not located in their own data centre. Following advances in cloud security and the steps taken by regulators to clarify how capital markets firms can implement regulatory data protection requirements in the cloud, privacy and security are no longer the main obstacles to cloud adoption.

The remaining challenge is the complexity of data and processes in large capital markets enterprises. Unlike a typical cloud-based retail application, the enterprise capital markets function relies on a complex network of data providers, trading and risk systems, reporting solutions, and other existing technology that must be migrated to the cloud. 

CompatibL choses to invest not only in the latest cloud technologies but also in training its integration and IT specialists to support clients’ transitions from on-premises to the cloud.

 

What criteria should determine firms’ choice of cloud model?

Siarhei Niaborski: The National Institute of Standards and Technology, a standards-setting body, defines three cloud service models (infrastructure, platform and software) and four deployment models (private, hybrid, public and community).

The infrastructure service mode – or Software-as-a-Service (SaaS) – is suitable for firms looking to move their on-premises data centre to the cloud without re-engineering their software around cloud services. While this service model brings some limited benefits, only organisations that take the next step of using the cloud via the platform service model – or Platform-as-a-Service (PaaS) – maximise the value of cloud migration. For vendor software, both PaaS and SaaS models offer full access to the latest cloud technologies, and the choice between them depends on a firm’s preferences as to who will maintain primary control over the cloud resources used to host the firm’s data and run its processes – the firm itself for PaaS, or the vendor for SaaS.

Of the four cloud deployment models, private, hybrid and public are widely used in capital markets, while the fourth – a community deployment model where a consortium of firms runs a shared cloud infrastructure – is relatively rare. 

The public cloud – namely, using the infrastructure of an established cloud provider such as Amazon Web Services or Azure – is usually a more cost-effective and flexible choice than the private or hybrid cloud. In addition, the public cloud is frequently the best choice for early access to new cloud technologies. Software vendors should be able to implement the firm’s choice of cloud deployment model without restriction.

 

Where is the greatest potential for cloud computing in the future?

Siarhei Niaborski: The greatest potential for cloud computing for capital markets is in enabling seamless integration of new technologies (such as serverless computing and NoSQL) and paradigms (such as big data and machine learning) into front-office and risk management applications. The infrastructure and computing demands of these new, game-changing technological advances are increasingly difficult to meet within the confines of a traditional data centre. 

Organisations that move their business processes to the cloud will gain a decisive competitive advantage by being able to deploy the new technologies and analytics faster and at lower cost than competitors that continue to use on-premises data centres.

 

Read CompatibL’s cloud adoption feature, Successfully moving risk software to the cloud

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