Conference Dailys TRADETech Daily 2018 - Page 25

THETRADETECH DA I LY THE OFFICIAL NEWSPAPER OF TRADETECH 2018 ABOVE THE CLOUDS Trading Book (FRTB) and Solvency II,” says John Kain, business development manager, capital markets, AWS Financial Services. “We’re helping traditional, industry-leading financial services companies transform their organisations through cloud adoption, and also enabling them to build net-new, innova- tive solutions for their customers.” It is evident is the disruptive nature AWS and other cloud providers are having on the financial services industry. Particularly with- in the infrastructure sector, entire businesses are now being built on AWS and the cloud, according to Kain. Deploying applications on top of that cloud infrastructure is now the next phase in its evolution. Global organisations such as Capital One have been steadily migrating their entire business on to the cloud, largely due to the cost and speed benefits it produces. “Most organisations like having a lower variable ex- pense in the cloud than they can do on their own. Moreover, they really like the elasticity as their demand fluctuates,” explains Kain. AWS is both disrupting the financial ser- vices industry directly and indirectly, as it is driving a new perspective from buy-side firms as to how they approach technology and who their service providers should be. “With AWS, institutional investors can devote more time to innovating and addressing customer challenges and less time worrying about infrastructure and technology deploy- ment. From testing and re-testing new applica- tions quickly and consistently, to having global technological resources at their disposal, AWS provides them with more control over their technology decisions,” adds Kain. Indus Valley’s Singh agrees, in which he has seen eight out of 10 buy-side clients putting AWS or a similar kind of cloud infrastructure into their systems. “It [AWS] is significantly disrupting the fi- nancial services world, whether it is visible or not. A situation where you can use artificial intelligence (AI) enabled AWS services that learn unsupervised instead of a traditional securities services provider for data manage- ment or reporting very well could be real in next few years,” says Singh. Never the same again The recent surge by AWS in financial services does pose the question whether it will enter the securities services industry. Market experts doubt this, considering the amount of regulation AWS will have to comply with to be a bank. Nevertheless, AWS has sparked a new way of thinking among buy- and sell- side fi rms over how financial and securities services are conducted. “AWS itself is, in my view, unlikely to offer banking and securities services directly to institutional investors, but these investors will indirectly be absolutely reliant on AWS’ infrastructure and capabilities because they are becoming more and more essential to the financial services providers and market infrastructures across the industry,” says Thomas Lemon, managing director, technolo- gy consulting, Protiviti. Lemon adds that AWS and other cloud pro- viders that harness open API’s (application programming interface) and other disruptive technologies are likely to have an indirect effect on business and operating models. “These indirect implications, which could spawn totally new business models, may be even larger than the direct impact of firms moving infrastructure to the cloud. This is likely to make existing financial services providers rethink their product and services strategies. They will either need to operate in the cloud, or with the cloud, or both,” he says. For the incumbent service providers that have been wary of the cloud, attitudes are shifting as more and more institutions look to take advantage of the benefits the technology brings. The Depository Trust and Clearing Corpo- ration (DTCC) has been one of the first global financial institutions to move its workload to the cloud. Historically, DTCC’s core plat- forms and systems had been hosted in private data centres, however it is now looking to modernise these platforms and turning to externally-hosted, public cloud vendors. In a recent white paper published by DTCC, it stated it would be expanding its leverage of cloud technology over the next three to five years, with the goal to reduce risk and improve security of its systems. Issue 1 25