By Gavin Carey, Head of Enterprise, EMEA, Thomson Reuters Financial & Risk
We recently shared the findings of a global survey of 250 senior decision makers at financial firms across the buy- and sell-side. The results were much more bullish than you might expect about how quickly the financial community is planning to adopt cloud when it comes to managing financial data.
A quarter of firms (24%) said they planned to use public cloud for the majority of their market data needs within a year. The vast majority (90%) said they would do so within four years. In line with this rapid adoption, the survey respondents said they would be allocating more money to public cloud – rising from 30% of their IT budgets this year to 47% in 2019.
The findings tally with what we hear from our clients. A year ago, most of the conversations around cloud were focused on the reasons not to adopt. Security was a big concern. These days firms are much more open to opportunities to experiment with the cloud. Security is no longer a blocker. For many it has become a positive reason to adopt, thanks to the investments made by the public cloud providers.
So have we reached a point where the cloud, ever on the horizon for the financial community, is entering the mainstream? Are we at a tipping point?
We see much more confidence in the industry about the end point, where public cloud enables new and better ways of working but some core and mission critical functions may never move to cloud. However the roadmap to cloud is varied depending on firms’ business goals and legacy constraints. We see three big trends defining adoption.
First, when it comes to large financial institutions, most activity is happening in innovation teams. Experimentation is easier when the content that’s needed is in the cloud. Whether they are looking to automate process, find new investment opportunities, or experiment with AI and machine learning, data scientists want to be able to flick a switch and access the data they need. Only the cloud lets them do this. And it’s what they’re used to from their PhDs. The expectation of being able to access large historical and reference datasets or real time streaming data easily in the cloud will, rightly, broaden to become an industry norm.
Second, smaller firms, unencumbered by legacy constraints, are more aggressive. If you look outside the large banks, there are more firms setting up systems from the ground-up, when a cloud-first approach makes sense. And the cloud opens the door to smaller, innovative operators to access important financial data that was previously only available by investing in significant on premises infrastructure. It also means faster time to market. For example, making our real-time price data available in the public cloud, means that firms can now feed their applications with our data in a matter of hours.
Finally, we see a broad trend of faster adoption of public cloud for historic data and middle- and back-office use cases and slower adoption for real-time, low-latency data for front office applications. There are a lot of firms already experimenting with AI and machine learning on historic datasets in the cloud. This will move to the next level as more financial datasets become available in the cloud, are normalised and connected, and public cloud tools can be combined with proprietary analytics to find new trading signals. But will we see banks’ trading systems move to public cloud in the short term? No.
Whatever their individual roadmap, financial firms are doing more with public cloud and a transformation is underway across the industry. When it comes to managing data, the cloud is no longer on the horizon but a daily reality for the financial community. As Europe continues to bake in the hottest summer I can remember, many of us might wish the same were true outside our offices as well!