The capital markets industry spends a fortune on technology each year—possibly as much as half a trillion dollars globally—including everything from specialized trading and risk applications, market data and supporting technologies, corporate IT, networks and infrastructure, and services like cloud storage and compute resources.

Microsoft, for example, with its Windows operating system, has had a presence on almost every desktop for years, as well as its near-ubiquitous Excel spreadsheets. Amazon has been the go-to provider of cloud services for organizations’ storage needs and for launching new applications with compute-intensive requirements. And Google has been a leader when it comes to machine learning and open-source tools.

Each “big tech” provider (with the exception of Meta, if you count Facebook as big tech) has a substantial user base in capital markets, but has thus far been largely content to treat the industry much like any other. Arguably, Amazon has adopted a more specialized approach to the distinct needs of the financial industry, to be able to support the complex requirements of finance-specific applications. And now others are following suit, hiring seasoned industry execs with in-depth understanding of the financial markets and its needs and participants, and tailoring generic, industry-neutral services to the specifications of financial firms and their suppliers.

“Big tech and big data forms have clearly placed the capital markets in their crosshairs as a primary revenue generator, where they clearly already have a big footprint,” says Bob Iati, managing director of TP Icap-owned research firm Burton-Taylor International Consulting. “They all have huge footprints, and already generate billions of dollars from this industry. But can they move into new areas and grow that footprint even larger?”

Microsoft may not make the most noise about its Azure cloud, but it’s the second-largest player among financial institutions (with Google closing the gap quickly in third).

While Microsoft presents obvious synergies to large financial firms that already are using the vendor’s technology—such as Canada’s Bank of Montreal, which is using Azure alongside AWS in a multi-cloud strategy that is expected to see the bank move 30% of its workflows to the cloud within three years—it has also proved attractive to established firms launching new tools, and to startups entering the financial space. For example, BNY Mellon tapped Azure to launch an application that uses disparate data sources to map ESG (environmental, social, and governance) factors against clients’ investment preferences, and European regulator Esma (the European Securities and Markets Authority) used Azure and Accenture to embark on a big data project, while back-office tech startup RQD Clearing also chose to run its platform in Azure.

But it was perhaps Google who made the biggest impression in 2021. The tech giant had dipped its toes into the capital markets water as an early investor in collaboration platform Symphony, and partnering with CME Group to make some of its exchange data available in the cloud, but had seemed content to remain largely at arm’s length from getting into the weeds of the capital markets. That changed this year: first, Google lured Symphony away from AWS as its primary cloud provider. That migration—which some believe was overdue, considering Google’s investment in the platform since 2015—was scheduled to begin before year-end.

Here’s what one fintech CEO told WatersTechnology editor-in-chief Anthony Malakian about why they thought Google began throwing its weight around this year: “Amazon is the default player in financial services, and Microsoft is coming up very fast because everyone is very comfortable working with [Microsoft Office] 365, and Azure has done some good things around security,” the CEO said. “So, this is Google’s way of forcing some financial services adoption of its cloud. That’s what happened here: We invested in you; you better get on our cloud.”

And as Coalition Greenwich senior analyst David Easthope pointed out, the move represents a tacit endorsement of Google by the financial firms that are Symphony’s backers, many of whom are also AWS clients. “As an organization dealing with regulated clients, the choice of cloud provider and where data will reside is significant, as these are all sensitive topics for banks and asset managers, so there’s no question that Symphony would have solicited lots of feedback from its clients,” Easthope said.

But it didn’t stop there: in November, not only did Google step up its involvement with CME in a 10-year deal, supporting the exchange as it migrates its tech infrastructure to Google Cloud, starting with data and clearing services, but it also invested $1 billion in the exchange. Now, that’s a fraction of CME’s market cap, but it’s still a huge amount of money and a symbolic commitment to the space.

Not to be outdone, AWS had much to brag about late in the year: FactSet began making some 30 datasets available via the AWS Data Exchange online data marketplace, bolstering the offering’s traditional market data content. It also signed up Nasdaq, which plans to migrate its North American markets to the AWS cloud, and partnered with Goldman Sachs to support the bank’s GS Financial Cloud for Data, a suite of data and analytics for financial firms, while insurer AIG chose AWS as its preferred public cloud provider. “Oh yeah?” the announcements seemed to be saying. “We’ll see your CME and Symphony deals and raise you Nasdaq and Goldman Sachs.”

More than storage

But the involvement of the major cloud providers isn’t just about cloud in the traditional sense of storage and compute power: it’s also about leveraging the tools those providers have developed around collaboration and artificial intelligence.

In fact, AI and data sharing is one of the ancillary benefits of Google’s elevated involvement in Symphony, officials said. First, use the platform to digitize and send unstructured information and documents that might have traditionally been sent by email or fax. Then, allow users to share and annotate them. Then, use Google’s AI tools to make better use of that information where it can add value in research or risk management, or to extract voice data from traders’ phone conversations to support trading decisions.

Meanwhile, US regulator Finra, a long-time AWS client, began using a combination of AI tools from AWS to revamp its enterprise search capabilities, making it easier for the regulator’s staff to query structured and unstructured records and understand relationships between datasets.

Burton-Taylor’s Iati notes that this is where relationships with cloud providers offer much greater potential for clients and the tech giants themselves, which have already built AI tools that are the envy of financial firms. “Amazon and Google have the ability to offer a level of analytics that elevates the game for all of these,” he says.

An example of an area where these tools are being put to good use is around corporate actions processing—the tedious, convoluted, and often still very manual process of communicating events such as dividends, stock splits, and other things that require a decision on the part of investors, and managing those investors’ decisions.

In October, Philip Moyer, vice president of strategic industries (comprising healthcare, life sciences, retail, consumer products, telecoms, media and entertainment, and gaming, as well as financial services) at Google Cloud, described how the provider is putting tools developed for generic uses—specifically, its DocAI text extraction tool and its Contact Center AI solution originally developed to monitor chats with customer call centers and route issues appropriately—to work on industry-specific challenges like this.

Moyer stressed that Google had no plans to become a corporate actions data provider, but can rather provide tools that make the process easier for those already involved, from vendors to consumers. In addition, Google’s Knowledge Graph can help enrich a corporate action by identifying and integrating available data not contained in the corporate action itself.

If its corporate actions efforts prove successful, Google plans to apply its tools to other important areas of the financial markets that still require human intervention, such as Know Your Customer and anti-money laundering requirements. For example, clients can use DocAI for parsing and extracting data from documents, then verifying information—such as fundamental data about a security, client or counterparty—using the Google Knowledge Graph.

“Corporate actions is a good place to start, because it’s an area that has always been flawed, and is an area where big tech companies could probably make tremendous strides with very little effort, based on the capabilities they have, and could also gain a deep understanding of the processes involved,” Iati says.

He also notes that the involvement of big tech firms in capital markets is a two-way street. As much as big tech can help derive greater value from other sources of data to support financial clients, it is also hungry to obtain more financial data.

Obtaining that data may drive these tech providers to push beyond traditional forms of data collection and licensing. “I would say they’re the most obvious potential acquirers of data businesses. I think we’re one big deal away from a tipping point. What if Mike Bloomberg decides to sell or break up Bloomberg? Or what if one of those companies decides to buy a bank or exchange,” or perhaps decide to take a leading role in turning digital assets into the next generation of financial services, Iati adds.

But while the big three cloud providers battled it out in 2021, next year could see even more competition for the space: IBM has been gaining ground with its own financial services-specific cloud, built with Bank of America, which has recently attracted BNP Paribas—the French bank having already migrated 40 business applications to IBM’s cloud—MUFG and Luminor to its ecosystem. In 2022, don’t count ol’ Big Blue out yet.