Ambasuthan Jananayagam, of Point Nine Financial Technologies, tells us how the realtionship between society and technology is changing.
The universe of financial technology is being engulfed by the broader evolution of relationships between society and technology. The new millennia started with the big bang of the imploding dot-com bubble; however, a decade on the internet pervades virtually every aspect of our life.
These events have been enabled by the rapid advancement of new technologies, such as high-speed internet, more advanced browsers and the implementation of concepts like the “cloud”.
For corporations, the new technologies have been pivotal to the transition of the management of enterprise software, from the traditional model to the software as a service (SaaS) model, a trend across industries, which now seems irreversible.
At its core, the cloud is the ability to store data (and, as a result, software) remotely. While a decade ago most of the data one used sat on a piece of hardware under the desk, today it may reside in a distant air-conditioned warehouse which in its past life was a nuclear bunker.
Due to the fact that SaaS and cloud are utilised inter-changeably in lay-speak, they are often confused. SaaS simply means that the provider is managing the software for the client. The cloud defines the physical location of the hardware upon which that software resides.
However, the SaaS model and the cloud are linked. The growth of the SaaS model has resulted in technology incumbents (like Google and Amazon) seeking to commoditise the components of SaaS infrastructure, such as the management of hardware on the cloud.
Most people unwittingly use the cloud in their everyday lives. Webmail, social media, and a raft of other SaaS we utilise may sit on a cloud (that is, be hosted remotely by the software provider).
The emergence of the cloud as an accepted mainstream mode for the management of hardware is likely correlated to the establishment of the main cloud vendors as modern corporate giants.
Google, Amazon and IBM can be considered the new central banks of the virtual world, albeit without regulation. Their market capitalisations are comparable to top-tier banks. However, the comparisons stop there. Unlike banks, they are not highly leveraged and their business models look more akin to pharmaceutical firms. They earn revenues from their latest products (patents), with large cash reserves set aside for research and development.
Embracing the concept of storing a corporation’s vital data in the vast void that is the virtual world may be counterintuitive. However, beyond their balance sheets, these firms (Google, Amazon, IBM, and so on) also deliver and continue to develop advanced know-how on internet security and privacy. With a virtual world comes virtual crime. The resources the technology incumbents can call upon to address these threats dwarf those of even large financial institutions.
A decade ago, in the shadow of the collapse of the internet bubble, many corporations and banks could be forgiven for questioning the storage of their most valuable information with blossoming new technology firms. Today, with vendors who enjoy vast financial resources and unsurpassed technological capability, the detractors of the cloud are certainly shrinking minority.
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