In brief
- Cloud adoption in the capital markets industry offers cost-efficiency, scalability, and flexibility, enabling banks to focus on business growth rather than technical maintenance
- Security and regulatory reporting are critical considerations for financial institutions when migrating to the public cloud, but as these challenges are addressed, cloud computing is expected to continue growing in the industry
- The Murex MX.3 platform, available on AWS, provides capital markets firms with scalability, flexibility, security, and access to advanced analytics, helping them stay competitive in a fast-paced market
The financial services industry is extremely complex. With legacy frameworks and several dependencies, the decision to undertake a digital transformation journey takes a lot of preparation. How do you preserve business continuity while changing countless moving parts?
The adoption of cloud technology in capital markets has been on the rise in recent years due to the need for cost reduction, increased ROI, extra agility to comply with regulatory changes, flexibility, greater scalability and so on. Unsurprisingly, banking leaders focus on business growth rather than infrastructure- and application-related technical maintenance.
One of the most significant advantages of public cloud migration is cost-efficiency. Capital market cloud services empower banks to shift from CapEx to OpEx, reducing IT infrastructure costs. Accordingly, they only pay for what they use when they use it rather than investing in expensive capital markets software and hardware upfront.
In addition to cost reduction, capital markets cloud computing offers extra scalability and flexibility. Financial institutions can quickly scale resources up or down and respond rapidly to changing market conditions and competitive challenges.
The public cloud also enables capital markets firms to access and analyze vast amounts of data in real time. This helps them make more informed business decisions and improve their overall performance.
Focus areas
Despite the many benefits of capital markets cloud migration, certain factors need careful consideration before pressing the button.
Financial institutions handle sensitive data, so one of their biggest issues is protecting that data.
Consequently, robust security measures are an essential feature of adhering to the regulator’s strict rules. And while leading cloud service providers cover the external security aspects, banks need to control security within the cloud-based capital market solutions.
Another pressing concern is regulatory reporting workloads. Financial services institutions must comply with a wide range of regulations (e.g., GDPR and PSD2) which can be challenging in a public cloud environment.
Despite these challenges, cloud computing in capital markets is expected to carry on growing. As companies become more comfortable with new technologies and the security and regulatory reporting issues are addressed, the public cloud will become an increasingly attractive option.
Market growth
The global cloud computing market has been projected to grow at 17.9% CAGR, reaching US$ 1,240 billion from an estimated US$ 545.8 billion in 2022.
Even though the adoption of public cloud computing in capital markets has increased, security and compliance are still the main issues to be addressed.
Trading platforms and cloud adoption
The capital markets industry is continually evolving, and companies are always looking for ways to stay ahead of the competition. One method is to collaborate with specialized trading and risk management platform vendors and utilize their advanced technology (e.g., the Murex MX.3 platform — now available on AWS).
Murex cloud implementation
Murex MX.3 is a leading platform for trading, risk management and processing for capital markets. It offers a wide range of capabilities, including electronic/algorithmic trading, market data management, risk management and much more.
Scalability
Companies can easily scale their Murex instances up or down as business needs change without investing in new capital markets software or hardware. This makes it easier for institutions to respond quickly to changing market conditions and stay competitive.
Flexibility
Companies (large banks or small hedge funds) can configure the platform to match their unique business requirements.
Security
The Murex MX.3 platform is built on a highly secure and compliant infrastructure, providing companies with data protection and peace of mind.
Access to advanced analytics
Banks can access a wide range of AWS services, such as artificial intelligence, machine learning and data analytics. Thus, banks gain valuable data insights for more informed business decisions.
Cloud adoption prerequisites and challenges
Capital market cloud services bring many business benefits, including increased scalability, flexibility and cost reduction. However, the cloud journey also presents challenges.
One of the major challenges of cloud adoption is its complex process. Migration requires significant planning and coordination, and ensuring that all aspects have been taken into account can be confusing. For instance, businesses must make sure their data is migrated correctly and applications are configured for running in the cloud.
Migrators also need to check that architecture and workloads designed to run on-prem are properly optimized (or realigned) to take full advantage of cloud-based services. This can be time-consuming and costly, and capital markets firms must ensure they have the necessary resources and expertise to complete the task.
Cloud adoption presents new security challenges, including making sure data is protected and access restricted to preauthorized users. Banks must also confirm compliance with the relevant regulatory changes and have adequate security measures in place.
An effective cloud strategy must address issues like security, re-architecting applications and the complexity of the migration process. With proper planning, resources and expertise, organizations can successfully migrate to the cloud and reap the benefits it has to offer.
Like to talk things over?
An Zoreza Global can also act as an as-a-Service technology partner, running XaaS models to help clients improve revenue, profitability and cost reduction.
If you’d like to learn more about how cloud adoption in capital markets could benefit your organization, visit luxoft.com/capital-markets/ or contact financialservices@luxoft.com
Praveena Grandhi
Praveena has over 19.5 years’ industry experience, specializing in Capital Markets, and Trading and Risk Management Solutions. She has proven her abilities on a wide range of roles including account management, delivery management, pre-sales, solutioning, capability development, and driven several value-added initiatives. Praveena also has a successful track record of managing multi-system implementation and simplification programs, Cloud and DevOps implementations, migrations and change-the-bank programs, bringing system integration partner experience and thought leadership to the journey. Currently, she is responsible for Zoreza Global India Trading and Risk Management Solutions and CLM practice and driving multiple initiatives across the organization as a subject matter expert.
Nimmala Naga Santhosh Baba
Santhosh is TREC lead for cloud and DevOps trading and risk management solutions at Zoreza Global. He has over 8 years’ experience across APAC and EMEA , focusing on cloud and DevOps solutions and building accelerators that help clients migrate to the cloud. Also helping in pre-sales and partnerships, Santhosh has an enviable track record in delivering multiple cloud and DevOps implementations. Currently, he’s responsible for developing and delivering cloud and DevOps solutions for the trading and risk management solutions practice and driving multiple initiatives across the organization.
