Competitive advantage, not just cost savings, is hidden in the clouds

What makes cloud services for the financial industry so special? Companies in a wide range of industries are moving all or part of their IT operations to the cloud, driven by the potential for capital and operational cost savings. But for financial services, there is a wealth of opportunity hidden in cloud services. Three specific requirements of financial markets make cloud development and deployment capabilities worth so much more than just reducing IT costs:

  • Quickly adapting and responding to market changes and capturing emerging opportunities
  • Rapidly scaling complex models and calculations on large data sets and thousands of scenarios
  • Effectively protecting intellectual property and customer data in a highly dynamic environment

Adapting to markets and opportunities

When markets shift, asset strategies, risk models, and investment opportunities can change significantly. Cloud-based development environments should serve the business by providing commercially-minded quantitative developers with the ability to quickly experiment, adjust, and deploy new models and algorithms to traders, asset managers, and other front office staff. Finance-specific cloud platforms should include far more than just generic development tools. Financial businesses need platforms that bring together quant libraries and web application frameworks, built on top of a robust data science foundation. Developers can focus on solving core business problems without having to redevelop common business functions or rewrite the same financial models. Collaborative environments, data warehousing, and transparent source code can eliminate silos common with spreadsheets and other legacy tools. Those companies who prioritize cloud-based solutions enable high levels of developer productivity, accelerating the ability of firms to manage risk, adapt to unexpected scenarios, and capture emerging opportunities faster than ever.

Scaling complex models and calculations

From rallies to corrections to crises, markets are always changing and sooner or later experience high volumes and volatility. In times of change, new models and risk assessments need to process massive amounts of data and run tens of thousands of scenarios to find optimal solutions. The scalability of cloud processing and storage are a perfect fit for these types of calculations. Elastic compute infrastructure allocates processors as needed, quickly scaling up based on the scope of the tasks and the desired completion time. Getting faster results or using larger scenarios is a simple matter of requesting greater capacity. For example, imagine running a simulation of 200,000 interest rate swaps with monthly time steps out to 30 years. This complex valuation model requires more than 50 billion calculations and generates 400 GB of data. These platforms give users on-demand access to elastic cloud compute and an integrated grid scheduler to make the most of it. Spinning up and securely integrating 10,000 processors with the database takes 5 minutes, and the whole process takes just 45 minutes, after which the processors are released. The total cost of this pay-as-you-go cloud calculation is just $72.

Protecting data and intellectual property

No amount of flexibility or scalability is worth the risk of jeopardizing client data or the firm’s intellectual property. Cloud solutions for financial services must always be designed and built around a core architecture of information security. To start, the base cloud infrastructures, such as Amazon AWS or Microsoft Azure, provide multiple layers of security controls and threat intelligence. On top of that, each client domain should have their own cloud instance and be firewalled, with no ports or IP addresses exposed directly to the Internet. All services should run in separate, isolated containers with only a limited and controlled set of encrypted interfaces. All data and communications, at rest and in transit, must be encrypted with strong, client-specific encryption keys. For secure access to client data stored in local databases and file systems, connections to cloud processes should be done via encrypted virtual private network (VPN) channels. Cloud platforms are at the forefront of building ecosystems and interactive workflows between financial services companies and their clients, making security all the more critical as firms across the industry become more cloud-centric.

Enabling productivity and innovation

For financial services firms, cloud infrastructure and applications offer more than just virtual machines and large data storage. Enterprise scale compute infrastructure, modern data science and analytics, collaborative application development and deployment, workflow automation services, and powerful quant tools are all core components of a cloud platform for the financial institutions of the future. As they prepare for the future of financial services on the cloud, many companies are turning to Beacon Platform to future-proof their business. Built by a team that created trading and risk platforms for some of the world’s largest banks, Beacon is bringing the cutting-edge productivity and innovative capabilities of cloud computing to the entire industry.