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Capital Markets and the Cloud: The New Normal

While Capital Markets firms were not the early pioneers of cloud technology, it’s now common practice to access computing and data storage systems in the Cloud.

Cloud Adoption in Financial Services Small Firms Mid-Sized Firms Large Firms Very Large Firms*
Not considering 2%
Planning stage 12% 9%
Early implementation 50% 35% 19% 6%
Mid implementation 19% 23% 36% 41%
Advanced implementation 18% 34% 46% 53%

Source: Broadridge Next-Gen Technology Pulse Survey

Driving transformation at lower costs

The opportunity with the Cloud is big, but it’s not just about cost savings. It’s also about creating an open architecture that allows firms to be more agile and flexible as they pursue innovation. Six advantages stand out:

  1. Cost reduction. The near-term payback of cloud technology is driving its global adoption. In addition to eliminating the need for long-term infrastructure planning, companies can turn their long-term capital expenditures into monthly operational expenses. Vanguard[1], for example, made the decision to move away from its own managed data centers in 2015. By using the Cloud, they have reduced their cost of computing by at least 30%.
  2. Agility. Building custom technology infrastructure is a massive and time-consuming undertaking, often fraught with unforeseen setbacks. Using the Cloud, Goldman Sachs[2] launched its digital bank in just 11 months—cutting five months off its implementation time.
  3. Data processing speed. The explosion of data has taken its toll on legacy systems. The vast computing power of cloud-based services adds speed at every step. For example, in the case of investor research modeling, firms can generate analysis quicker, which leads to better investment decisions.
  4. Scalability. Market volatility can lead to dramatic volume swings. The ability to expand and contract capacity adds tremendous flexibility. Along with capacity, it’s also important to scale customer support. Leading cloud service providers such as Amazon Web Services (AWS) offer omnichannel cloud contact center support that helps companies provide superior, scalable client service at a lower cost.
  5. Cost allocation. Cloud services offer the ability to measure usage at an individual desk level. Many firms are using this capability to allocate variable costs by function or department to calculate a more precise return on investment—and maintain tighter control over costs.
  6. Transparency. Pooled data utilities can also break down internal data silos, providing people in the firm access to a more complete picture of clients, assets and opportunities.

Perception may be the biggest barrier to adoption

Data security consistently ranks as one of the top concerns with cloud technology. Experts, however, say that today we have more robust security in the Cloud than in prior ASP environments.

Broadridge, for example, has invested millions on cybersecurity to safeguard client data. Recognizing that each challenge is unique, Broadridge offers both public and private cloud solutions. With AWS, we’re investing and building public solutions that enable clients to scale up quickly and globally while embracing open architectures for enhanced agility. The Broadridge Private Cloud™ powered by IBM, supports clients’ regulatory requirements and specialized processing needs at scale.

The next big cloud migration: Asset Servicing

When people think about the Cloud, most focus on the infrastructure and platform. But the real power comes in how you structure, configure and apply solutions to solve specific business problems. One area that’s ripe for change is asset servicing.

Inefficient processes in asset servicing present challenges, specifically when it comes to operational risks and cost control. Common hurdles include:

  • Poor data quality
  • The inability to integrate workflows with upstream and downstream processes
  • Legacy systems that only handle specific subsets, such as distinct asset classes or regions

The challenges are compounded by regulatory changes, such as the Shareholder Rights Directive or Central Securities Depositories Regulation.

For asset servicing, the Cloud makes it possible to drive transformation with real-time processing and real-time messaging. Now firms can streamline corporate actions, dividend, and coupon processing across multiple asset classes, business lines, and regions by automating the full asset servicing lifecycle—adding scale, speed, and efficiency. Next-gen technologies like the Cloud help firms standardize and automate processes for announcements, notifications, elections, accruals, entitlements and settlements globally.

The conversation has switched from “Why Cloud?” to “Why Not Cloud?”

Adoption is rarely a top-down decision to move a firm’s entire data center to the Cloud. More frequently, the journey occurs over time, application by application. Firms looking to expedite rollout will often deploy:

  • Prototyping sandboxes that enable rapid development, prototyping and evaluation of cloud-connected applications.
  • Standardized APIs, which can simplify integration and deployment.
  • Automated releases, that continuously update applications with the latest code.

Be ready today and tomorrow

The Cloud makes it possible to innovate with speed and efficiency—and Broadridge’s hybrid cloud strategy reflects the regulatory and security realities faced by Capital Markets firms today. This combination of public and private cloud solutions makes it possible to scale with confidence in any environment.

Every day, we simplify the complex with The ABCDs of Innovation®. It’s how we help our clients understand and apply next-gen technologies—including AI, blockchain, the Cloud and digital—to transform their business and get ready for what’s next.


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