8 novembre 2022


Thomas Krantz
Advisor to the Managing Director
The subject of this opinion is “the cloud,” defined as the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale. Giving up direct control of a firm’s IT is a very hard decision for business leaders, but the advantages of the cloud are impossible to ignore.

Technological change affects every part of financial services, an industry that has largely been computerized for decades.  For the last several centuries, whether sending news and prices by ship or by horses, telegraph, the telephone or the internet, the constant for finance has been the impact of changing technologies on work.  Further back in time, the rice market prices in Osaka were communicated by smoke across the Japanese archipelago.  The point is clear.

WAIFC member marketplaces are at different places on the paths of adoption and implementation of all the IT tools and services available in 2022.  “Firstcomers” to a new tool or service have advantages, but they also have the costs of pioneering. “Latecomers” have advantages, too, as prices come down and mistakes made by others can be avoided.  Each must consider its own environment when choosing among the possibilities of what needs adopting, and what of their existing IT structures must then be adapted to achieve a better overall result.


In September 2022, the largest market infrastructure organization in the US, DTCC, published a research piece, suggesting that its own processes and reflections on the cloud might be of informational use for colleagues around the world.[1]  The research and publication was executed jointly with Celent.

This opinion writer shares the highlights of this report only as one example of the questions the cloud raises.  It is current, and it is part of a public outreach to be sure that the financial services industry can have a proper global conversation.  We thank DTCC and Celent for publishing their work.

Recent Background

Insurers, banks, accountants, lawyers, and IT firms themselves - the securities industry in its entirety has experienced much upheaval since the Great Financial Crisis over a decade ago. Changes to regulation, market structure, business models and technology have driven the business to massively transform its processing models.  Even as the speed of innovation is accelerating, the pace of change in technology supporting those models has advanced at a steadier rate—to some frustratingly slow. The sudden Covid shift to working from home acted to accelerate cloud adoption efforts across financial services, but legacy applications and architectures often remain difficult to modernize.  All the while, the value of data has been rising rapidly, but only for those able to access and use it. 

To help understand how its clients are preparing for this cloud-enabled, data-driven world, towards the end of 2021 and into the start of 2022, DTCC commissioned Celent to research technology adoption and the future plans of different clients.  DTCC’s clients play a critical role in reimagining and building the financial marketplaces of the future in the US and often beyond, and so are well positioned to share views on the evolution of technology across the securities industry.

Celent’s research found that while great progress has been made to digitize and modernize technology estates, especially regarding cloud adoption, key challenges remain.  Securities firms are having to support parallel technology infrastructures, which adds to costs and, even worse, restrains full digital transformation.

And Now the Cloud

The financial industry is rapidly evolving with the convergence of many factors, including an accelerated shift to digital services in response to the needs of clients and a post-pandemic workforce.  Amid changing regulatory requirements and an increasingly volatile cyber threat landscape, the pushing and pulling of these influences highlight the essential need to maintain high standards for technology resilience and security.  The large-scale shift to public cloud platforms for operations, combined with the imperative to assure clean data availability, provides a generational opportunity for the industry to align on a shared vision.

The cloud serves as the shared infrastructure for firms to build on. To realize the full business benefits, the question of best practices and approaches comes to foreground.  More than a decade ago, the IT focus was on customizing full technology stacks inside each firm; now it must be on enabling modern platform governance, controls and security.  

It is hard to give up direct IT control and commit to the cloud, and it will be hard – but crucial – to commit to enabling firms’ services to provide access to clean data without compromising property rights and security.  The benefit would be greater business agility and faster time-to-market for services, with regulatory compliance a top priority. There is a trade-off here for every financial center:  opportunities often arise when a shared good can provide benefits for all, yet it is a real struggle to get beyond the firm-level view to see what the broad marketplace needs are.  The countervailing force to market-wide coordination is, as ever, competition to consider in each marketplace.   

Generation Z, born digital, is rapidly entering the workforce and expecting financial services that are always-on and always-available.  

Given its commercial value, the area showing the most potential for transformation is around data exchange mechanisms.  While the DTCC/Celent study found that the use of data marketplaces, application programming interfaces (APIs) and distribution ledger technology (DLT) is expected to accelerate, legacy mechanisms such as fax, email, and spreadsheets continue to get high levels of support despite a decreasing pool of clients utilizing them.  

Survey Key Findings

For DTCC clients surveyed, cloud adoption is nearly universal, though to varying degrees, with “cloud-first” and “cloud-native” approaches now widespread in securities and investment management firms.  

  • About half of the study participants can be categorized as “cloud leaders.” Many actors are “cloud natives” for all their new development.
  • The top three reasons given for cloud adoption by the buy- and sell-side were: increasing business agility, operational efficiency, and enhancing security and resilience.
  • Most study participants took a federated approach to cloud adoption, with a core central Center of Excellence (CoE) set up as an expertise and advisory center, with some flexibility for business technology teams to innovate and deliver cloud-enabled applications within standards and policy set by and overseen by the CoE.
  • Mainframes continue to support firms’ core processing, and this is not likely to disappear. Recent technological advances, such as mainframe containerization, are allowing mainframes to support new applications.
  • Full migration to the most recent methods of data exchange is effectively gridlocked due to the need to support less sophisticated clients; firms are contracting with vendors to offload and intermediate non-conforming clients so as not to disrupt service.
  • Data exchange remains stuck in manual and batch-based approaches; but the study found methods for real-time data transfer/exchange, such as data marketplaces, DLT, and APIs. These are expected to be dominant in the next two years.
  • Most firms consider themselves relatively immature in the use of artificial intelligence and machine learning (AI/ML), although they are experimenting. AI/ML remains focused on getting simpler problems solved. In this study, AI/ML development received only 1%-5% of the enterprise technology budgets.


The pull to the cloud and its possibilities are real.  Meanwhile, and as ever, watch those budgets to see where the money actually goes.

[1] https://www.dtcc.com/-/media/Files/Downloads/DTCC-Connection/DTCC-Celent-Industry-Technology-Study.pdf.

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