By Vikas Srivastava, Chief Revenue Officer at Integral
After the uncertainty of 2020, this year was bound to be full of unexpected surprises. Within the first month of 2021, the unpredicted and extreme volatility seen in the equity markets demonstrated how critical it now is to have a strong technology framework in place. For some, such as Nasdaq EVP and Chief Technology and Information Officer Brad Peterson, it highlighted the urgent need for cloud computing across the financial services sector.
Peterson recently credited his company’s investments in cloud tech as what helped the exchange giant weather sharp demand swings around the GameStop mania. He also noted that cloud has been integral to risk proofing Nasdaq’s tech stack for the future. By shifting data-intensive processing and storage to the cloud, Nasdaq is able to scale its usage where necessary and help free up capacity and power for shifts in investor demand, according to Peterson.
The scalability of cloud, along with its lower implementation costs, are two major reasons that financial institutions of all sizes, from community banks to exchanges as well as the $6trn FX industry, are turning to cloud computing to reduce costs while increasing efficiency and improving innovation at every turn.
Cloud, of course, has been a popular topic in the market for many years. Those of us that have been speaking about the benefits of cloud over the last decade are unsurprised that this technology helped Nasdaq maintain control during the extreme market swings. As people and companies increasingly work in a distributed environment, the need for cloud will only increase to meet a growing demand for off-premise capability. Add to this the fact that cloud is by far the most cost-effective technology out there, and you are left wondering why more businesses aren’t swapping their on-premise software for cloud-based infrastructure. For those financial institutions that are still on the sidelines when it comes to cloud, is the extreme market volatility seen throughout the last year a wakeup call.
Most interestingly, customer needs have rapidly evolved over the last year and they are asking for more while budgets stay fixed. Leveraging cloud allows firms to quickly adjust to meet a customer’s distinct needs and creates a specific and flexible solution that fits their requirements on an ongoing basis, even as the market and ecosystem continue to evolve.
Customer needs look different in every sector, and that’s where the flexibility and customizable function of the cloud comes into play. For example, the FX industry is a business that is constantly evolving and is ideally suited to the faster deployment and time to market, as well more agile upgrade and enhancement cycle of cloud. Take the requirements of FX pricing engines as an example, or how to hedge risk or whether to use the last look mechanism. Unless a firm has access to an agile technology stack, it is difficult to evolve workflow in a timely manner.
With so much uncertainty likely in our future, it doesn’t matter how firms prepare themselves for the unexpected, only that they are ready when additional market volatility spikes hit. While the rest of 2021 and market volatility are both anybody’s guess, we anticipate that cloud will become the glue that holds this sector’s technology together.