To begin with, I need to make a confession: I’m a technophobe. Whether at home or at work, I’ve managed to steer well clear of anything that looks like new technology. Not, I should add, because I fear it; rather, because I like what I know, and it always seemed such a faff to learn something new! To live in such blissful ignorance of new technology has historically been tough in the home, but much easier in the workplace.
Little by little, new technology has crept into the home – to the point now where my fridge ‘talks’ to my computer, I can turn on the heating from 20 miles away and, thanks to my iPhone, not only can I activate music in any room, I can also check if anyone is strolling around the house on CCTV!
The contrast between that and my work life is stark. In the two decades I spent in an investment bank, very little changed. I began by using a very clunky, mainframe-based technology set-up in my various operational roles and, two decades later, ended up selling software solutions that were based on the very same, clunky old system I had used a decade earlier.
Many of my core beliefs about new technology were formed during that time. I came to learn that the cost of maintaining IT platforms was eye-wateringly expensive, and the whole process was time-consuming. Worse still, the thought of changing those platforms brought many of my colleagues out in cold sweats. Three-year, $5 projects would rapidly ‘evolve’ into five-year projects costing multiples of the original estimate. It’s perhaps unsurprising that, given this inflexibility, the reliance on manual processing was significant. Ultimately, it was easier and cheaper to just continue using Excel.
That said, we were no different to any other bank. Everyone was struggling to keep up, as markets were developing so quickly. We all accepted this IT mess, and tried to ameliorate the situation by raising expenditure. Incremental profit increases made that a very easy decision, as well as the absence of any alternative solutions. That merry-go-round of significant expense for marginal gains became standard operational procedure for the industry at large.
Two years ago, I left banking and joined a fintech company. I was asked to join on the grounds of how well I knew the industry ‘domain’. As a technophobe – a topic we covered in my interview for the role – I was perhaps not best positioned to promote the advantages of the cloud! But fast forward to the present day, and I can honestly say that the past 24 months have been the biggest learning experience of my professional career.
Getting to grips with the cloud-based nature of innovative solutions was relatively simple. A lot of jargon I’d heard for many years was suddenly becoming clearer. What took longer was really understanding the philosophy that sits behind software as a service (SaaS). This involved challenging all my preconceived ideas about the nature of new technology. For those that haven’t been on this ‘journey’, I will simply summarise the concept as: the desire to fundamentally change how companies implement and support their IT infrastructures and, by doing so, provide enormous efficiencies and competitive advantage to those institutions.
However, the learning didn’t stop there – and really got interesting when I took the message on the road: I had assumed that there would be objections to cloud-based solutions based either on security concerns or challenges from heads of technology who would be trying to protect their fiefdoms. How wrong I was!
It was clear from my first few conversations that many of even the largest buy-side and sell-side institutions are embracing cloud-based services. Sure, they have questions around security, which are very reasonable: they expect their cloud-based providers to meet the same exacting standards they would impose upon themselves.
As for the heads of IT, they are the guys tasked with achieving the impossible. They are being asked to significantly improve systems while at the same time radically cutting costs, requiring the modern-day equivalent of alchemy. Cloud computing, along with a series of other modern technologies, may just be able to achieve this. Again, from the outset, I often found myself pushing an open door.
Sounds simple, right? Not so fast!
Not everyone has caught cloud religion just yet. It seems (not unlike myself two years ago) that for those who are not well versed in the benefits of this new technology, there remains a certain scepticism. Before we analyse that, I think it makes sense to explore what those benefits are. In the context of SaaS, at least, they emerge as sophisticated, secure and functionally rich platforms that can be implemented in weeks – not months, or years! That means:
As our American cousins would say, what’s not to like?
Why, therefore, do certain constituencies remain sceptical? One key element is that it all sounds too good to be true. Especially for companies that have been relying on antiquated technology for years, rather than investigating new technology. Second, there’s an element of concern attached to ‘giving away control’, whereby ownership of the platform no longer resides with the institution using it. Finally – and we have to be honest about this – the young, fintech start-ups that promote this brave new world are… young! And… start-ups! As a rule, they’d struggle to provide 10 years of fully audited accounts.
None of those concerns are unjustifiable. And yet, as time passes and cloud-based solutions become more ubiquitous, they are being voiced less often.
In summary, fintech and SaaS solutions are coming of age. This is reflected in both the length of time that some of the ‘new’ companies have been in existence, and the sheer number of institutions that have migrated to the cloud in one form or another. One need only visit the websites of some of the best-known cloud providers to see the extent and range of their user bases.
Adding a historical perspective, what I'm saying in perhaps more formal terms is that many heads of IT and their business sponsors are confronted today with the options of build, buy or partner. Looking at each in turn:
In the context of the finance industry, the success of the cloud is a symbiotic function of the push coming from the application of new technologies, working alongside the pull from an industry sorely in need of a solution for an age-old problem.
Better still, the future is looking rosier all the time. A number of cloud-solution providers are joining forces to create a fabric of best-of-breed tools, all of which are interoperable, but are provided in such a way as to ensure that flexibility and choice remain at the heart of the combined offering. And, before you say it, I know that sounds too good to be true as well!
Karl Wyborn is MD, global head of sales at CloudMargin