“The year 2016 is to the cloud as 1996 was to the internet,” according to a speaker at the New York regional event of the FIX Trading Community, held at Thomson Reuters headquarters in Times Square on October 3. The comment underlines the strongly held opinion, expressed by all key speakers at the meeting, that cloud usage for data storage in financial services is at take-off point.
In the last two years, there has been a marked uptick in deployment of the cloud rather than traditional data centers, and the trend is only set to continue. A survey of 250 financial institutions conducted by a leading dealing platform firm in July, the results of which were shared with attendees at the meeting, revealed that 90% say that the bulk of their market data will be on the cloud in four years.
A great many of both the shortcomings and suspicions of the cloud as a viable data storage resource have been overcome in the last few years, both as the cloud itself has undergone rapid technological development and also as innate conservatism to its implementation has lessened.
Yet barriers to even more widespread acceptance remain. Speakers confessed that for some market participants the cloud still might not be the most appropriate solution. Opposition to wider usage can also be found in major banks, wherein entrenched interests sometimes conspire to forestall change.
Despite these caveats, the consensus among speakers and audience on October 3 was that the cloud had reached a point of irresistible progress.
Until recently, banks and other possible users feared that the cloud was unsafe and valuable data could be lost. It was also felt, understandably, that the cloud couldn’t be controlled and managed in the same way as a traditional privately-owned data center. These misgivings are fast becoming redundant. For one thing, the considerable cost advantage of the cloud is proving an unanswerable argument – as it has been over the last 25 years in the financial services industry whenever any technical innovation threatened the status quo.
It’s not that financial institutions have become cavalier about security fears in the face of the cost advantages that the cloud offers, it is that the technological improvements seen in the last several years have made breaches of privacy far less likely. It wouldn’t matter how cheap the cloud is were it not safe.
In fact, it is now believed that the cloud is more secure than other storage applications. The technology designed to safeguard security, involving encryptions and micro-segmentation, is considerably more sophisticated – and at no extra cost – than would be possible in a privately-owned network.
The flexibility of the cloud is such that it can respond to a disaster situation more swiftly and smoothly than a private network, further enhancing security. If an entire region were, for some reason, to be shut down, operations could shift to another region seamlessly. “People are coming to the cloud because they know the water is safer than in their own back yard,” noted one speaker.
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