Perhaps the most widely known made up word in history, Google, is a part of everyday lexicon and even the trading universe. Traders use Google not just for searching the latest sports trade or economic stat but also to help store and save data to the ubiquitous cloud. It is here where Google has been touching the capital markets in a new and different way, said Petra Kass, Head of Capital Markets Marketing for Google Cloud. And it is here where the firm wants to make its mark. [IMGCAP(1)]
Before joining Google, Kass led marketing for a portfolio of solutions, including market data, regulatory compliance, commodity trading and risk management, vehicle finance, tax reporting, treasury, payments, and consulting services. She also led the marketing campaign for the joint FIS and Google Cloud Platform bid to the SEC and SROs to build the Consolidated Audit Trail (CAT).
Kass took a few moments to speak with Traders Magazine’s editor John D’Antona Jr. on the state of cloud adoption in the capital markets, security, costs and its alignment with Aite Group.
Traders Magazine: Describe the current state of cloud adoption among capital markets firms? If low, why? If high, why?
Petra Kass: When we first started talking about cloud with firms a few years ago, the conversation mainly revolved around reducing costs. Now, we’re diving deeper into streamlining processes and optimizing infrastructure spend. For firms who take cloud as a game changer, it’s an opportunity to rethink a business. They’re focused on answering questions like: What can we not do today that we could, if we had the resources and access to computational power? Do we have a full view of new capabilities that new technologies, such as AI and ML can offer us? How do we better serve our clients? How can we further reduce risk?
When customers come to Google Cloud, they’re looking to us as a true partner. It’s not a traditional vendor relationship. Collectively, we brainstorm on solving business challenges and how our tools can help solve and reduce these problems. For example, we may rethink the entire technology and process architecture to break data silos based on what kind of data and reporting various stakeholders need. As a result, our customers understand their own respective customers and risk profiles better, creating APIs and becoming more agile. It’s about bringing the best of both worlds to ultimately create a more transparent and more efficient financial market.
Our customer Two Sigma spun up quantitative research workloads, scaling up when necessary and only paying for the compute seconds they use, without having to grow their server farms. We also support the entire capital markets ecosystem through our partner network. We recently partnered with Deloitte to bring new solutions to customers, with financial services and capital markets being a key industry. Additionally, Dow Jones DNA is both a Google Cloud Platform customer and technology partner. As a customer, it leverages our platform to allow capital markets firms scalable, flexible access to its 30+ year premium news archive. As a tech partner, Dow Jones along with Quantiphi support capital markets solutions such as developing custom Knowledge Graphs for gathering insights around network effects and business impacts of global events.
TM: What is the biggest hurdle for these firms to migrate to the cloud? Tech costs? Security? Some other factor?
Kass: Migration from one environment to another can always be challenging; it takes a lot of planning and consistent communication. For example, some financial institutions have long histories, with countless of mergers and acquisitions or with a large legacy estate. That means transitioning all workflows and data can be a major undertaking.
Regulators are also working through questions around how regulatory and compliance requirements apply in a cloud environment. As regulators become more familiar with the technology, and these kinds of regulatory questions are clarified, financial businesses will feel more confident in moving to cloud.
Finally, technology and change management cost concerns often accompany discussions associated with modernizing legacy systems. Firms must ask themselves: “how much money are we losing in unearned revenue because we can’t access the right data or don’t have the right tools or insights to serve our existing customers?”
At the end of the day, cloud’s advantages such as speed and transformational power, outweigh the short-term challenges of initial onboarding or migration. When you look holistically at the opportunities, it becomes easier to see both the financial and timesaving benefits of cloud infrastructure.
TM: You partnered with Aite? Why them?
Kass: We have an ongoing relationship with Aite, which is one of the many analyst firms we work closely with in the industry.
TM: Briefly discuss your recent white paper commissioned via Aite. What findings stood out? Workload? Cultural changes?
Kass: We partnered with Aite, who surveyed 19 capital markets firms so we could learn how they are adopting cloud, big data analytics, AI and ML to drive growth, performance and savings across front, middle and back offices. The data revealed three distinct stages of the cloud migration maturity:
- Infrastructure Optimizers: The first step on the public cloud journey, where firms focus on migrating specific workloads to save costs.
- Cautious Strategists: Firms build on the success of their initial public cloud migrations, and begin to change the way they develop technology to increase cost savings and start taking advantage of capabilities only available on public cloud.
- Transformative Innovators: Firms shift to a fully public cloud-enabled mentality, and fully leverage the flexibility and agility of the public cloud to build industry-changing solutions and attract top IT talent.
While firms may be at varying stages of the cloud journey, there are lessons that can be learned at each stage:
- Communication and transparency are key to making the goal of changing the firm’s DNA to become more innovative ultimately possible.
- Measuring and monitoring progress in a formalized manner is important in order to learn from failures and successes together (both from the business and tech sides).
- Capital markets firms can learn a lot from what the technology sector started a decade ago, in terms of software development methods and fostering and governing innovation.