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Supplements » FundTech Winter 2020

Roundtable: Data updated

FundTech – Since Covid-19, there’s this feeling that the whole world has gone to the cloud and will stay there, but what’s the reality in terms of cloud adoption? Are there still concerns over security and data portability?

Roche – It is true that companies are increasingly outsourcing to cloud service providers and that obviously brings benefits – reduced cost, enhanced operational efficiency and so on. However, the challenges around data protection and information security remain. Esma [the European Securities and Markets Authority] has over the summer issued a consultation paper with guidelines around governance, due diligence, and the supervision of such outsourcing arrangements that aims to address risks around investor protection, market integrity and financial stability. It remains to be seen if the benefits from using a cloud service provider will compensate the cost linked to implementing those guidelines.

Clarkson – Cloud is without a doubt happening and will provide many, many benefits such as better security and better computers. But companies need to take a holistic view. It’s not simply lifting and shifting into the cloud, there is much more complexity to it. You also don’t want to have everything with one cloud provider because that is a concentration risk, so how do you plug and play with multiple cloud providers? Complexity will come into it, so you have to look at your ecosystem first, rationalise it, clean it up – which will help with cleaning your data, and then move to the cloud. Jumping straight in might not be the best answer.

Keefe – That is a key point. You have to be set up to move, you can’t just say: ‘I have a cloud strategy and I’m moving everything next week.’ It’s like anything with data, it has to be clean and in a good format to enable new models. At Calastone, we are currently moving different services on to the cloud. Some firms may be able to currently manage without the cloud, but as models become more complex and as APIs come to the fore, you would have to be very confident in your internal databases to be able to expand and contract during peaks and troughs. We also see that a lot of the big monolithic distribution platforms find it very hard to innovate because of their technology stack – changing one small part of a database over here affects something over there. So we are seeing more clients moving to the cloud and a microservices-type technology environment where you have separate and dissociated services built and linked to the cloud via APIs.

Peacham – Cloud works for certain company strategies, but for others, it doesn’t. If you take Amundi, for example, there is no clear competitive advantage in focusing a massive amount of resources and capital moving a platform, which we currently provide internally at a reasonable cost with good security and the ability for clients to access, to an external cloud. It is really a question of balance. I have done cloud migrations for different services, and I found many of them inflexible. The services are standardised for a good reason – to keep the cost low. There are certain services which make sense to have in the cloud. And it might make sense to move your infrastructure to the cloud if your focus is solely on operational costs. But you shouldn’t go to the cloud for cloud’s sake. Your cloud strategy has to be based on the benefit you are seeking, whether its performance, accessibility or scalability. 

If you were a new company or a new asset manager and you are building a new infrastructure, of course you would look at cloud services first, but if you are migrating an already complex and/or legacy-based infrastructure, you need to spend your time rationalising your IT beforehand. It is about choosing the right technology for the right services.

Keefe – You’re 100% right. It’s the same with APIs. If you’re a new company building a new tech stack, you’d probably use the cloud and APIs because it’s arguably the most efficient way to store and get the data, but if you’re an incumbent, you have a system and you have connectivity, why do you need to change? You have to have a reason.