Data management: reinventing a foundational capability to optimise cloud transition for financial services firms

The finance industry has been relatively slow to move to the cloud, but challenges highlighted during the pandemic mean on-site data storage solutions are just not up to scratch anymore

by | March 23, 2022 | alveo

Data is the lifeblood of the financial services sector. By mining and analysing financial market data, customer information and overall market trends, financial institutions can glean game-changing insights — but where to store that sensitive information has always been an issue.

Financial services leaders have generally been reluctant to move data off-site, fearful that without a watchful eye, it could go missing or end up in the wrong hands. In the past, this has prevented their companies from exploring the potential of cloud-based storage and management.

And then the pandemic happened. Suddenly, financial staff needed “speedy and secure remote access to data,” says Neil Sandle, Head of Product Management at Alveo, a provider of financial data management solutions. “Since the start of the Covid-19 crisis, we’ve seen the shift towards the cloud accelerate.”

The data management challenge

 At an intrinsic level, the financial services industry is about information; information on financial products, how and where they trade, their terms and conditions, events such as dividends, splits, mergers, customer behaviour, trading patterns, and market trends. Financial services firms need to be able to access and act on said information fast — but never at the expense of data quality and information security.

The financial services industry is also getting increasingly data intensive. There is a lot more data available through public sources, commercial data sets and data gathering from business relationships. A large toolbox is available, filled with data integration, data analytics and BI solutions to make sense of this data. However, firms struggle in finding the optimum balance between quickly and reliably sourcing, and verifying this data, as well as provisioning their business users with fast and easy access to that data.

The wholesale shift of firms’ data and application landscape can offer a solution. “With financial organisation data-sets getting larger and larger to allow for deeper, AI-powered analytics, storing data locally is going to get more difficult — and more expensive,” Sandle says.

The reasons for this are two-fold: firstly, companies will have to pay for increasingly large on-site storage units, which don’t come cheap; and secondly, internal servers tend not to have access to the latest data management tools and software, meaning in-house data scientists will have to spend valuable time on resource-draining menial tasks.

Finding solutions in the cloud

For a growing number of players in the financial services space, cloud solutions can no longer be ignored.

In years gone by, companies had no choice but to spend eye-watering sums on data centres large enough to facilitate future growth. Today, things are more flexible with pay-as-you-go cloud storage options which can be tailored to a firm’s unique data demands. If a little extra capacity is needed, they go up a band; if less is required, money can be saved by moving down a notch.

Heightened data security is the second core benefit of cloud storage, says Sandle. “It might seem counterintuitive to send data off-site in order to make it more secure, but cloud providers take cyber-threats incredibly seriously and have cutting-edge encryption and redundancy protocols”.

Microsoft sets a good example on the data protection front, employing more than 3,500 cybersecurity experts to monitor its Azure cloud servers twenty-four hours a day, seven days a week.

Speed is a third advantage the cloud has over conventional, on-premises storage. As the financial services sector grows increasingly data intensive, employees will require ever-faster access to large pools of information. This is problematic for in-house servers, which have limited storage, bandwidth, and computing power. Cloud data centres, on the other hand, are continually upgraded with the latest and most efficient computing hardware, reducing the risk of slow-downs and outages.

Not without challenges

 The incentives for financial service firms to move their data into the cloud are clear. But it isn’t all plain sailing up in the digital sky.

Adopting a cloud storage approach means facing up to rigorous new compliance considerations. With more and more data moving off-site at speed, finance firms need to be able to keep track of what information is where — especially as they embrace new automated systems.

Throughout 2021, reporting obligations also got stricter, with companies having to prove their capacity to meet tighter data protection regulations. Cloud storage solutions can help with this, offering information audit trails and high levels of data traceability, but there is a learning curve involved which financial businesses cannot afford to ignore.

There is also a potential issue around cloud provider fragmentation, Sandle says. “It can sometimes feel like ‘place your bets’, having to pick a cloud provider then sticking with them. This can be problematic if a company becomes tied to a service that isn’t really meeting their requirements.”

Sandle explains that as well as data quality and data lineage to track and trace information, Alveo also provides data sourcing, data mastering, data access, distribution and analytics capabilities focusing on market and reference data for financial services firms.

“With data providers increasingly making their data directly available in data warehouses in the cloud or on cloud storage, and with the emergence of a range of data marketplaces, moving to the cloud offers new opportunities for data sourcing as well as data sharing,” he says. “Alveo’s cloud native database and distribution components provide a highly scalable approach to onboarding new business applications.”

 Cloud neutrality

The trick is to maintain a level of ‘cloud neutrality’. This means selecting a data management solution which, like Alveo, can interact with data on any public cloud platform, whether it’s Amazon Web Services (AWS), Microsoft Azure, Google Cloud or Oracle, or any other.

“We shy away from using any proprietary hooks that are specific to a particular cloud provider,” says Sandle. “It’s always good to keep your options open so you can scale up, or scale down, more easily in the future”.

This sort of versatility and elasticity is at the heart of the cloud computing revolution. Today, financial services have an unimaginable amount of data at their fingertips — a resource that is reshaping how their industry operates. Effectively funnelling that data into business operations and decision makers will be a key competitive differentiator.

To thrive, finance firms need a means to manage that data swiftly and securely, and for that, cloud-based data management solutions are a critical enabler.

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