Why institutional investors are now betting on cloud computing

"Everything that can be digitised will be digitised" is a current leitmotif in many sectors of our economy. Increasingly, the financial industry is also feeling the urgency associated with this message. And this is especially true for investors and investment managers.

Efficient and effective management of investments is rapidly gaining in importance. On the one hand, the diversity of investment forms is growing due to the persistently long phase of low interest rates.

At the same time, the legislature is placing ever higher demands on reporting and monitoring. The BaFin reporting system (registers of guarantee assets, statements), the Bundesbank reporting system (Foreign Trade and Payments Ordinance (AWV), German Regulation Governing Large Exposures and Loans of EUR 1.5 m or more (GromiKV)) and Solvency II are examples of the burgeoning tasks in the financial industry.

An industry in transition

And it is not only the internal processes and IT systems that are facing profound changes. The markets and the relationships with customers, external partners and employees are also undergoing a noticeable transformation. This has been made evident yet again by the Corona crisis and the much-discussed topic of the home office.

The entry of large internet platforms onto the market and the growing number of FinTechs are putting additional pressure on the industry. Efficient digital processes therefore increasingly appear to many market participants as a decisive and perhaps soon vital competitive advantage. Suitable cloud solutions can make an important contribution here because they realise and bundle advantages on several levels.

IT advantages

Cloud solutions reduce the effort of managing investments by using services from the cloud provider:

• acquisition and provision of all necessary hardware resources,
• IT operation of the servers, applications and required additional services,
• management of all interfaces,
• installation of patches and release changes.

The key here is operation in redundant, ISO-certified data centres, if possible in the users’ home country. This also includes continuous 24/7 monitoring as a guarantee for the high availability of such a platform.

Process advantages

Centralised management via a cloud platform simplifies the integration and use of partner solutions for selected aspects of investment management. This applies, for example, to

• the automated retrieval of master, fund or market data, or
• the use of legally compliant digital trustee solutions.

Cost advantages

A key factor in the triumph of cloud computing is the cost benefits that come from sharing IT and human resources. As a user of a cloud platform

• investment managers do not have to purchase or allocate any server hardware for the operation of the software,
• investment managers do not have to worry about maintaining and running a platform,
• investment managers only need relatively simple end devices for the use of the software by their employees,
• investment managers can let their employees work almost anywhere,
• investment managers are not dependent on on-site support from the cloud service provider. Everything can be done remotely.

These advantages are the driving force behind why many companies entrusted with the management of investments are discovering cloud computing for themselves. Cloud solutions are the key to making internal processes for investment management more flexible, efficient and cost-effective. That is why the financial industry is increasingly where it’s at for cloud computing – and this is happening now.