(First in a series of Microsoft Blog posts about the cloud in specific industries. Today: Financial Services.)
Financial services firms have never been shy about using technology. They have long pushed the envelope for more speed and more sophisticated models for business operations. Now they’re getting ready to leap to the next generation of IT: cloud computing.
We view the cloud as a fundamentally disruptive technology for financial services. While new algorithms and business models in financial services are constantly changing, the IT infrastructure in the back office has stayed in the dark ages — with siloed systems, old mainframe applications, and a disconnect between geographic regions. Cloud computing will change all that by allowing financial firms to spend less time and money on IT, and more on innovation and advancement.
As the economy recovers, financial services firms still face a number of challenges including market risk, continued M&A activities, increased regulation, and the ever-present need to cut costs. There is no question that cloud computing is the next generation of IT for the financial sector. Here’s why:
- Financial firms rely on constant access to accurate information and timely updates on their assets. The cloud allows firms to seamlessly scale their computing needs up or down to handle peak loads during the year. For example, the cloud allowed risk modeling for insurance companies during hurricane season, without having to invest in more hardware. Or portfolio modeling during a major market event, without purchasing a new datacenter.
- Under pressure to control costs, all of our customers are looking at ways to reduce IT costs. The cloud model is based on a subscription service, much like a utility that allows customers to pay only for exactly what they use.
- Exposure to risk and increased regulations is putting more pressure on financial firms. Customers are demanding more risk mitigation, and firms are being asked to do more with less. Microsoft partner RiskMetrics, a leader in risk management and financial research and analysis, offers a powerful, high-value risk analytics and reporting platform for collecting, analyzing and monitoring risk reporting. The company built a solution on the Windows Azure cloud platform to provide on-demand computing capacity for its risk analytics applications.
As the cloud continues to emerge on Wall Street and Main Street, I expect to see increased acceptance and inventive scenarios empowered by cloud computing. Financial services companies, both large and small, will embrace the cloud, and shepherd in new opportunities for significantly improving their business processes and achieving their goals — all at a lower cost and in a more efficient way. In fact, TowerGroup, a leading market research firm, predicts that the cloud will become an increasingly important — even vital — enabler of the financial services sector.
That is great potential for any company. But for a financial services company, it is also the fuel that will drive unprecedented change.
INDUSTRY GENERAL MANAGER, FINANCIAL SERVICES