Capitalizing on data’s migration to the cloud

Data management ecosystems in the financial sector are increasingly being transferred to the cloud. It’s a trend that continues to grow and will have significant implications for the sector, with the global financial cloud market expected to reach $90.11 billion in 2030, up from $23.67 billion in 2020.

However, moving market and reference data to the cloud has already been taking place over the past few years. This is of little surprise when considering the benefits of cloud-based data management, which include reduced infrastructure and maintenance costs, plus increased elasticity and scalability. As provisioning requests change and data volumes fluctuate, the flexibility of a cloud-based infrastructure helps to futureproof operations. Tangible benefits in managing market data in the cloud include infrastructure that better suits dynamic business requirements, centralized licensing, and easily shareable datasets.

Scalability is a key advantage of cloud computing, which is ideal for increased volumes or intensity of data, and facilitates flexibility in only paying for the resources used, while encouraging standardization of data charging and consumption. In addition, any changes across the data’s lifecycle and source data can be recorded more centrally. With this new level of transparency, cost of change is reduced and data assets can be shared internally as well as externally.

From SaaS to ecosystem shift

What started as individual applications being offered on a SaaS model has now accelerated to the shift of complete data ecosystems to the cloud, leading to a sea-change in pricing and reference data management processes. With on-premise systems plagued by slow manual processes that are typically fragmented in nature, the use of cloud to organize data delivery, integration, quality management and distribution can lead to improved efficiency and reduced costs.

With the rapid rise of cloud platforms such as AWS, Microsoft Azure, Oracle Cloud Infrastructure and the Google Cloud Platform, cloud utilization is increasingly becoming the status quo. Additionally, providers of risk and settlement systems, trading solutions and portfolio management systems are seeing the security, scalability, efficiency and reduced cost benefits and are adopting cloud-based components as a result. Significantly, the trend among financial organizations is to move the whole data ecosystem to the cloud, rather than taking the step of shifting individual applications or using specific software to host their data management platforms.

It’s critical that data management systems are both cloud agnostic and cloud native. This makes it possible to effectively source, integrate, quality-control and distribute market data. It’s vital that while these systems need to be optimized to ensure they run effectively in the cloud environment, they also shouldn’t be reliant on a single cloud provider’s proprietary service or tied to the services of one vendor.

With data providers increasingly using cloud as a distribution method, solutions need to be able to directly pick up datasets. Given the still increasing variety of datasets, effective cross-referencing and the connection of internal to externally sourced data to build a composite view will be a major differentiator. Permissions management, lineage and effective data governance can both increase data ROI but are also needed to address regulatory requirements. Finally, a comprehensive shift to cloud must be combined with effective last-mile integration to ensure aggregated data is effectively channeled into business applications, data warehouses and into the hands of end-users.

Finding new methods of moving data to the cloud and the applications within it is crucial to maintaining competitive advantage. Considerations including keeping data safe in cloud environments and ensuring information security, right through to usage monitoring, data quality and enhanced permissions management need to be considered. In the case of increased automation to place applications in the cloud, it’s critical to maintain data quality, as this typically removes a manual process where mistakes could previously be picked up.

This challenge can be made easier via the partial or full utilization of vendor-managed solutions, providing a single place for the end-to-end supply of market data from vendor feeds all the way through to client distribution. To be truly effective, these solutions need to be cloud neutral, part of which involves being capable of interacting with data on any cloud platform.

Optimizing data ROI

While the migration of market and reference data to the cloud has been underway for some time, this process is now becoming more widespread. It’s not just data management solutions and processes making the switch—data vendors are placing data on public cloud platforms upstream and application providers are doing the same downstream.

This trend means it is essential that financial service organizations place their market and reference data in the cloud as soon as possible if they want to keep pace with the competition. But they must remember the importance of choosing cloud-native solutions that can capitalize on new distribution methods and effectively link and distribute mastered data. Cloud agnosticism and neutrality are also critical to deliver the scalability they need.

Shifting the entire ecosystem to the cloud will enable those firms to access scalability and flexibility, as well as new avenues to share data within the business and with third parties. A managed services approach to data management will help to eradicate the issues associated with data processing and platform maintenance, and with such data playing a key role in both finance and risk, keeping it all in one location will allow firms to make the most of their data.

Mark Hermeling, CTO for Alveo, which provides market data integration, analytics and data-as-a-Service solutions.