A Fintech Innovator’s Race To The Cloud

By March 15, 2017Bitcoin Business
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The banking and capital markets sector is starting to embrace cloud-based software and systems, setting off a race-to-the-moon type of competition for fintech innovators such as Calypso Technology.

Calypso has long offered on-premises software for financial trading, processing, risk management, and accounting, and now it’s offering those capabilities via Calypso Cloud Services, running on the Oracle Cloud Platform. The stakes in this space race are high: The winning software provider will become “the de facto solution on the cloud” for financial institutions, says Calypso Chief Customer Officer Corinne Grillet.

Calypso Chief Customer Officer Corinne Grillett says there’s no “if” about financial institutions’ shift to the cloud, but the “when” and the “how” of the shift will come in several steps.

But bringing the cloud to financial markets is like a moonshot because the sector has held onto its on-premises systems for so long while other industries have migrated to the cloud. More importantly, it’s about banks, hedge funds, and other financial companies now being able to do things that simply weren’t possible before with on-premises software. Grillet offers four examples of fintech innovation that is possible only with the cloud:

Microservices: When regulators create a new requirement for banks, for example, Calypso can offer a cloud-based microservice that meets precisely (and only) that new reporting rule. That microservice comes with a very light IT footprint that a bank can integrate with its existing system—even if the bank doesn’t use the Calypso core software system. Such microservices can lower a bank’s compliance burden.

Blockchain: The online, distributed ledger technology behind the alternative currency Bitcoin holds promise across the capital markets industry. Calypso is currently running several proof-of-concept engagements with their clients, all using the Oracle Cloud Platform.

Utility provider services: Calypso works with banks, such as BNP Paribas Securities Services, that serve as “utilities,” meaning they provide smaller banks with all the back-office operations and technology they need to run. Such utilities will be able to use Calypso’s cloud-based software to provide those services to smaller banks.

Automatic upgrades: For banks to innovate, they can’t spend a big chunk of their time and resources doing routine software updates. The cloud eliminates much of that burden, providing automated updates that free in-house talent to focus on higher-level work.

In today’s low-interest-rate environment, banks and hedge funds must cut their costs as well as innovate. “If you're in a lower-revenue world, there is no other choice than to lower your cost if you want to survive,” Grillet says.

A Question of When and How

Grillet thinks financial institutions are ready for the cloud because it delivers the lower cost, higher innovation, and greater agility they need. Organizations “can no longer sustain the cost of installation and ownership of running such heavily customized platforms in-house, as they used to do 10 to 15 years ago,” she says of the on-premises technology infrastructures that predated the cloud.

The regulatory fallout from the global financial crisis not only raised costs, but it also led to new rules that emphasize banks’ need for agility in adapting to a changing industry, Grillet says.

Of course, the lower costs and improved agility matter only if bank leaders and regulators are confident in cloud security. Grillet says they increasingly are. And Oracle’s global network of cloud data centers provide customers with features to address needs involving access control, monitoring, ISO certification, as well as data residency requirements.

But while there’s no “if” about financial institutions’ shift to the cloud, the “when” and the “how” of the shift will come in several steps.

“It really depends on the mindset of the organization and on the regulatory framework of the country where they operate,” Grillet says. Some institutions may be ready to migrate to the Calypso SaaS offering, which Calypso maintains entirely for its clients on the Oracle Cloud Platform. Others may take the interim step of deploying Calypso and its standardization platform, Bank-in-a-Box, on Oracle’s infrastructure as a service (or another cloud provider).

“We envision the majority of the business’s new deals coming mainly from the cloud in a very quick timeframe, maybe one or two years maximum,” Grillet says.

Cloud Database Critical

Calypso chose the Oracle platform to power its cloud services in part because Oracle Database has long underpinned the high performance and accuracy of Calypso’s banking software—essential in this industry. “The database is one of the key, if not the most important, piece of our application when it comes to driving performance,” Grillet says.

Calypso liked that Oracle Database Cloud Service replicates its Oracle database natively in the cloud, ensuring that Calypso clients will have a similar experience in the cloud or on premises. Calypso also plans to tap Oracle Exadata Cloud Service, a cost-effective way to boost performance for institutions of all sizes.

Just as important, Calypso likes that Oracle Cloud is ready for enterprise workloads. “Oracle was selected as the provider that could help us achieve the quickest time to market with the lowest risk,” says Grillet, who also cited the company’s close working relationship with Oracle development teams over the years.

The cloud is “where we forecast the biggest growth in terms of business over the next three years,” Grillet says. “It’s our biggest strategic initiative, and we really live and breathe this transformation every single minute of the day.”

Carrie Massey is a New York City-based freelance writer who covers technology, clean energy, education, public policy.

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