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Cloud Computing Changes the Game
Cloud computing’s unique blend of scalability, flexibility, massive processing power and cost efficiency means cloud-based solutions are gaining more usage in capital markets.
For several reasons—security concerns, legacy investments in custom applications, siloed IT governance, intensifying regulation and relatively available capital—cloud computing’s immediate impact on capital markets has lagged behind that in many other industries.
Accenture believes on-demand, third-party solutions within firms will expand from business process outsourcing in horizontal processes, to business process as a service across both horizontal and vertical processes. As more cloud-based offerings emerge to meet this demand, this will expand the industry’s traditionally monolithic and relatively monopolistic cloud supplier base—historically centered around exchanges—to a more diverse and dynamic provider community, including industry-wide utilities targeting specific vertical processes.
Firms that seize the cloud opportunity will gain greater agility, scalability, and speed, bringing them a competitive edge, and positioning them as the industry leaders of the future. Those who ignore this opportunity may find themselves playing catch-up.
While adoption of cloud models has made great strides in some industries—and even in other areas of financial services—several factors have tended to hold back cloud offerings in capital markets. As a result, most cloud solutions in the industry are restricted to specific back- and middle-office activities, and commoditized areas outside core systems.
We believe there have been several reasons for the relatively slow and limited progress in the adoption of cloud in capital markets, including:
Across the capital markets industry, early recognition of the benefits of cloud computing is gaining momentum because of changing industry dynamics. The foundations of the capital markets industry have been virtualized—and inherently cloud-like—since the 1980s.
During the decades since, exchanges around the world have effectively acted as quasi-monopolistic cloud providers, charging fees to provide trading algorithms and services remotely and on a shared basis to market participants, while saving those users the expense and effort of creating, provisioning and upgrading these services themselves.
Ongoing and rapid changes in regulations, technologies and business practices are now disrupting these established industry dynamics and creating new opportunities and challenges.
In particular, accelerating industry trends have combined with rising cost pressures since the global financial crisis, creating a number of new concerns for capital markets firms. And cloud computing may play a role in finding the solution to these issues.
These trends include:
Bob Gach is Accenture’s global capital markets industry managing director. His responsibilities include setting strategy, developing Accenture’s offerings, establishing investment priorities, managing large global accounts and working with our global account teams.
Mark J. Grindle is a senior manager in Accenture’s infrastructure and cloud strategy group. He has significant IT transformation experience, including strategy, planning, organizational change, private and public cloud, data center facilities, infrastructure, network, end user computing and applications.
Emmanuel Sardet is a managing director within Accenture’s financial services group. He helps design, build and run agile and scalable technology to deliver operational efficiencies and transformational outcomes, and meet dynamic business demands.
Steve Scemama is a managing director with Accenture’s global capital markets leadership team, leading capital markets technology and trading platforms business services. He works with investment banks to transform their business and IT organizations, supporting the operating model and IT architecture, implementing trading solutions and developing alternative sourcing approaches.
Andrew Starrs is Accenture’s group technology officer—financial services, responsible for developing industry-specific technology strategies and shaping technology-enabled change programs for banking, insurance and capital markets clients.
March 6, 2014
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