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Originally Posted On: https://thecapital.io/article/how-capital-markets-are-embracing-cloud-technology-N8Nvk7XG__unpsuHzNo

Back in the 2000s, when technology was still regarded as cutting-edge, capital markets were known for their innovation. Today, most industries are using AI, predictive analytics, and big data servers, but asset managers and hedge funds were early adopters of these technologies.

Despite the increasing cost and fee compression faced by the financial industry, innovation and technology have largely taken a backseat to the challenges it faces. One of the most visible signs of this is the lack of widespread adoption of cloud services. Most firms talk about their cloud-first strategy, but in most cases, they only have a fraction of their workloads on the cloud.

In a report released by Murex in 2018, the Association of Financial Markets European (AFME) identified cloud computing as one of the four key technologies that could transform the industry. It noted that this technology could help transform the way banks operate. In addition to being a critical component of their operations, cloud computing also serves as a platform for other innovations and business change.

A survey conducted by Accenture revealed that only 29% of financial firms believe that the industry will be able to fully adopt public cloud services in the next five years. There were various factors that prevented this from happening, such as the complexity of legacy infrastructure and concerns about security and compliance.

Despite the various advantages of cloud services, such as lower costs and increased scale, many financial firms still lack the necessary infrastructure to support their operations.

As the digital era began, many firms made the transition to a new technology strategy. They faced the complexity of their operations and chose to use a variety of platforms and solutions. The Covid-19 pandemic highlighted the need for firms to adopt a more agile approach to their operations. Most firms that had made significant investments in cloud services were able to weather the storm and adapt to the changes.

This is especially true for small and medium-sized firms, which don’t have the same level of operational agility and flexibility. They have limited cloud service options due to their specific needs. Some of the most common use cases for cloud services are regulatory reporting and infrastructure as a service.

Although some of their trading and risk management applications have migrated to the public cloud, the statistics show that the majority of financial firms still have a significant amount of on-premise infrastructure. According to Accenture, only around 5-10% of the industry’s technology solutions are cloud-based. This means that the majority of firms have not significantly decreased their infrastructure.

Public Cloud and the Benefits for Financial Services

Despite the importance of cloud services to financial firms, the use of public cloud is becoming more prevalent within the industry. This is due to the increasing number of third-party providers and the increasing number of firms that are using the public cloud.

The following are the most undoubted advantages of the cloud for financial markets:

• With the latest technology, such as artificial intelligence and machine learning, capital markets can benefit from the increased agility and flexibility of their operations.
• One of the most important advantages of using public cloud services is the ability to monitor the consumption of various services. This allows financial companies to reduce their spending on physical hardware and facilities. This eliminates the need for them to spend a lot of money on upgrades. By moving to a pay-as-you-go model, firms can free up resources for other digital capabilities.
• Through the use of public cloud services, capital markets can improve their operational efficiency and speed up their processes. This can be achieved through the use of automation and self-service tools.
• Another important advantage of using public cloud services is the ability to quickly develop and test new features and services for their clients.
• One of the most effective ways to mitigate the risks associated with the use of public cloud services is by ensuring that the company’s operations are resilient. This can be done through the use of multiple strategies, such as the distribution of the risk of disruption across multiple infrastructures.

In September 2021, PWE Capital announced the move to the MetaTrader 5 platform, which is designed to meet the high requirements of hedge funds. The platform is powered by the MQL5 Cloud Network, which was created by MetaQuotes on October 14, 2011. The network allows users to exchange computing resources between peers.

Over the course of its 10-year operation, the network has been able to accommodate over 34,000 test agents. For a few months, PWE Capital has been testing the effectiveness of various algorithms. Through the results of these tests, the fund managed by PWE Capital has generated a 124% in Cumulative Return.

Building the business case for cloud

Despite the potential cost savings associated with cloud adoption, it is still important for capital markets to consider the broader strategy behind it. The key to successful cloud adoption is having a clear vision and a robust governance framework. This can help them improve their operations and manage their risk. In addition to being able to provide a variety of services, cloud also allows them to accelerate their efforts in identifying and solving business problems.

Despite the varying paths that organizations take to adopt new technologies, there are some common patterns that emerge in the capital markets when it comes to adopting new cloud services.

As a growing number of investment companies look to adopt cloud technology, they are also taking a broader view of what it will look like in their operations. This includes considering the various benefits of cloud-based solutions such as Infrastructure-as-a-service, Platform-as-a-service, and Software-as-a-service. The varying use of these solutions across different value chains of capital markets can also be considered when it comes to assessing the viability of cloud.