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The Trading Mesh

How financial firms can reap the benefits of the cloud

Thu, 16 Jul 2015 02:52:00 GMT           

On 2nd July 2015, The Realization Group, together with Adaptive Consulting, hosted a round table based on the recent Financial Markets Insights report entitled “Adventures in the Cloud – From Capex to Opex & Beyond”. Mike O’Hara of The Realization Group facilitated a discussion about both the opportunities and the challenges for financial firms looking to embrace cloud and in particular, emerging microservices technology. 

John Marks, Director at Adaptive Consulting, Alex Lashford, Head of Engineering at Cake Solutions, Ray Bricknell, Managing Director of Behind Every Cloud and a group of IT and finance specialists met at the Dome Room in the City of London to discuss the business benefits on offer and what companies will need to do to achieve them.

The Realization Group Associate Editor Adam Cox reports.


Heads in the cloud

When it comes to the cloud, John Marks of Adaptive Consulting said many of his company’s investment banking clients at first don’t appreciate just how much the cloud can do for them. They invariably focus on cost savings and security. 

“Both are important. There are costs savings to be made. The security of course is a big concern and those concerns need to be addressed,” Marks said. “But we think that’s kind of missing the big picture. The big picture is there’s an opportunity for a lot more agility.”

To put the agility factor into context, Marks said typical new build projects at investment banks require some hardware and the response from the infrastructure team is always the same: the data centre is at capacity. It might be six months before anything can happen.

“The wait is while we wait for something to be decommissioned,” Marks said. “When you look within that data centre you’ll find that the vast majority of that hardware is underutilised. And some of the servers are not used at all.”

But in a cloud model, a firm can think in terms of virtual machines that can be brought up and down on demand without having to raise a request or deal with time-consuming bureaucracy.

Want to get even faster? Firms can use technologies like Docker containers to deploy individual services, Marks added. “Rather than coming up in minutes like virtual machines they come up and down in seconds.” That means the firm can change its services in real time, adjusting to second-by-second developments such as a spike in load. 

This in turn enables a microservices-style architecture, where individual teams own a small vertical slice of functionality, from the user interface to the data. No more complicated efforts to coordinate with other teams. No more ‘big bang’ releases that only take place every six months or in some cases every year. “We can start to think about every two weeks, every sprint iteration,” Marks said.

Alex Lashford of Cake Solutions said adopting this technology requires a culture change.

“In traditional development there has been this wall between testing and operations and you develop your thing and throw it over the wall and it might come back or it might not. The idea of this whole ethos change really is to streamline this process so that the developers and people involved in the project really own it until it goes live,” Lashford said. 

Marks said firms could be even more radical in embracing change. Imagine, he said, a firm that required anyone building a system to expose their API so that other teams could take advantage. “If, within the bank, everybody who wrote a system started thinking about exposing everything they do as an API it would be amazing the sorts of mash-ups we could see between systems.” 

Say a firm wanted to introduce a new product and needed certain reference data. In this scenario, it would be automatically exposed by default. Of course, banking data is sensitive and the subject of heavy regulation. 

“Clearly you have to stick within the bounds of regulation,” Marks said. “I’m not saying you have to expose every piece of data, or do it at the lowest layer of granularity, I’m just saying, if you build a logical service that can do something useful, expose it to others, advertise it to others, and then they can continue it.”


The legacy factor

One issue that tends to thwart banks is concern about legacy technology. But Lashford said that need not hold them back.

“I’ve never worked on a single project or don’t know anyone who has worked on a project that hasn’t had to integrate some legacy software. You find me the developer who has never had to integrate with any legacy software, they haven’t written much code,” he said.

Ray Bricknell of Behind Every Cloud said dealing with legacy just goes with the territory. He said the industry is now in a third generation of major IT models. The first was mainframes, the second was distributed architectures and this third generation groups a number of new ways of working and commercial models under the broad banner of ‘cloud’.

“Just like we still have some old COBOL programmes running along we’re still going to have today’s SQL databases in 20 years, and what you build today will be legacy in 20 (or even many less) years time. There isn’t one golden hammer to fix everything, the trick is to find the best execution platform for each workload and to integrate them.” Bricknell said. Many of Behind Every Cloud’s clients are on the buy side and he said they are typically still focussed on the issues and benefits of more rudimentary outsourcing, and to date are yet to fully adopt true “cloud” models and toolsets at any great scale.

But provided a firm could make the cultural shift and not let legacy issues act as an excuse for doing things the old way, Marks painted a bright picture.

“I think it’s a really interesting time, both technologically and also organisationally within banks,” he said. “Technologically, we can now start thinking about doing things that were just impossible five years ago. For us as a group of technologists not to be thinking about how we can exploit these opportunities would be a terrible shame.”

Marks did not discount the obstacles firms face, whether it be legacy systems or regulatory burdens. “But there will be high fliers, there will be people who can navigate their way through these waters and they will thrive and others will fall by the wayside and I think that if we can get the organisational change to meet the technology that can enable things to happen,” he said.

Banks, as one round table participant put it, are no longer banks. They’re IT companies.


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