Embracing the Cloud – the role of cloud-optimized technology within investment management operations

“The cloud.” It’s part of the modern lexicon, but what is it, exactly?

People talk about the cloud as a mythical mass of information, hovering in the ether above us. While that is a fair description of consumers’ experience with cloud technology, the ‘mythical mass’ is actually a physical network of servers, data storage infrastructure, and people. This network offers on-demand remote access to programs, services, and data storage via the internet.

The role of cloud optimized technology

The cloud has permeated our lives and schools almost seamlessly – think Apple iCloud or Google Drive. It has also transformed global enterprise. Since 1999 when Salesforce launched their internet-enabled delivery of applications and services, cloud-based technology platforms have asserted themselves as the new backbone of business operations.

In the investment arena, recent innovations like robo-trading and blockchain dominate headlines while cloud-optimized technology and services quietly transform everything from portfolio modeling and implementation to workflow management.

Investment managers benefit from the speed, efficiency and accuracy afforded by a cloud of hardware, software and services that stores, aggregates, and aligns data within a framework of technology tools and human services. This collective of easily accessible technology and services provides a streamlined path for managers to grow and expand into new markets and products.

Embracing the cloud

One of the primary benefits of the cloud is that it helps firms control costs, primarily by reducing the need for in-house infrastructure. Cloud solutions do away with the need to locally install, run and maintain applications and data centers. This provides a benefit by reducing demand for internal technical support, allowing firms to devote resources to enhancing core competencies. For example, internal IT functions may be allocated to support proprietary expertise such as portfolio construction instead of supporting secondary functions such as software update installations.

The cloud also enables scalability. To the extent that services are offered via the cloud, firms can selectively access as little or as much of the services as needed. Investment managers are no longer locked into expanding and supporting internal infrastructure as business conditions change. When markets contract, firms can respond quickly by downscaling usage. When markets rebound, or firms enter new channels or markets, they can easily scale up. For example, a firm entering the retail business may rapidly attract thousands of accounts—cloud-based services can readily accommodate the volume without requiring additional resources from the investment manager.

The agility of cloud platforms and services allows users to easily integrate with other remote or installed systems and tools. Virtual on and off ramps to a cloud-based offering are built so firms are able to access best-of-breed applications and create truly custom experiences. Third-party partners such as brokers, custodians, fund accountants, or sponsors -- and tools including trade builders, risk management software, portfolio analytics, and compliance monitors -- are readily accommodated to suit each manager’s unique requirements.

This agility also empowers growth through acquisition. Newly acquired investment managers and multi-site investment franchises can be brought onboard a single, firm-wide platform without requiring a physical move. Consolidation of investment strategies is enabled through real time communications, as are firm-wide reporting and compliance oversight.

Optimizing a cloud strategy

Generally, a platform that’s at home in the cloud is accessible from anywhere at any time by anyone. “Secure cloud” services for investment managers are secured, meaning they are accessible from anywhere at any time but only by those authorized to access and interact with proprietary and confidential data and services. This is crucial for global, multi-site investment management franchises.

Like the cloud offering itself, firms using cloud platforms are more nimble and responsive than their peers. They experience no business interruption as updates and upgrades are made to their systems and technology, they waste no time creating backward compatibility to legacy systems, and they effortlessly scale up - or down - with business demands.

They’re playing to win, positioning themselves to weather market fluctuations while capitalizing on growth opportunities. The investment management business must be dynamic in today’s environment of rapid change, a need readily supported by cloud optimized technology.