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Intelligent Trading Summit: Managed Services and Cloud Solutions Gain Traction in Capital Markets

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Managed services and cloud solutions are gaining traction in capital markets, not only because they reduce costs, but also because they offer opportunities to test innovative ideas without the need for capital expenditure.

Moderating a panel discussion at last week’s A-Team Group Intelligent Trading Summit, Peter Farley, director at A-Team Group, asked the panellists to detail the benefits of managed services. Adam Hawley, director of managed services at Caplin Systems, responded: “Business agility and lower cost are key benefits, but managed services also allow some players just to get into the market. We also see end users getting better service as they invest in managed services for a better experience.”

William Fenick, strategy and marketing director, financial services, at Interxion, agreed that cost is a driver for moving to managed services, and added: “Equally important is the ability to jump into innovation. Users can test innovative ideas in a managed services environment without encroaching on capital management.”

Moving on to the perception of managed services as uniform solutions with little leeway for user differentiation, James Blackburn, global head of equities product marketing at Fidessa, explained: “Cost savings and lower total cost of ownership are compelling reasons to use managed services, but they are not enough. Differentiation is important. Customers need solutions that allow them to deploy their own IP within rich functional services. They benefit from a large number of users driving the platform forward for all, but also their own IP as a differentiator.”

If these are some of the benefits of managed services, Farley asked how potential users can sell them internally. Fenick said: “People are sceptical about managed services, but the proof is in the pudding and that is evolving.” Hawley added: “Most important is the reputation of an available service and proving that we can meet service level agreements.” Blackburn answered similarly, saying: “A provider needs to prove it can offer a reliable and scalable service that is better than those built in house. Reflecting fears of data leakages, providers are also increasing their security teams and their focus on customer data security, although responsibility still lies with the customer if anything goes wrong.”

Turning to the potential of cloud services, the panel agreed that, at least for the moment, financial services firms remain nervous about the data security issues of public and hybrid clouds, but are taking up private cloud options. Fenick said: “Firms move into the cloud as they run out of capacity in house, it is also great for Big Data storage. I see cloud services and financial services walking hand in hand.” Reviewing markets that are already established in the cloud, Hawley commented: “Retail is already in the cloud and as barriers to entry are coming down for trading it is time institutional and corporate firms moved in.”

Acknowledging that one size hosted solutions do not fit all and that firms have different views on which applications and data can be hosted and which should remain in house, Blackburn concluded: “Managed services are here to stay and many firms will use them once they are proven as a sustainable business model.”

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