Trading Tomorrow - Navigating Trends in Capital Markets

Decoding Cloud Adoption in Finance with Elle Ellis and Kalyani Koppisetti of AWS

• Numerix • Season 1 • Episode 9

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The cloud has revolutionized how businesses operate, bringing forth a wave of innovation that has transformed scalability, cost-efficiency, flexibility, and collaboration. In the labyrinth of finance, where regulations are intricate, compliance is paramount, and institutional culture holds significant sway, the transition to the cloud has been a cautious one. But now, more financial institutions are embracing the benefits cloud technology can offer.

Join Numerix's Jim Jockle, Elle Ellis, and Kalyani Koppisetti of AWS and Numerix's Chief Information Officer, Nestor Nelson, as they share their first-hand experience with cloud adoption and Capital Markets. They discuss creating a 360-degree view of customer data, utilizing AI and machine learning for trading strategy advisory, advantages of scalability and automation, security considerations, and more. Don't miss this comprehensive overview of the financial sector's journey toward embracing cloud technology.

Speaker 1:

Welcome to Trading Tomorrow, navigating trends in capital markets. I'm your Jim Jockle. In my decade plus of working with Numerix's global leader in capital markets risk management technology, I have launched our Thought Leadership Division, a place where insights, innovation and expertise converge, just like this podcast. Through my journey in the financial realm, I've had the privilege of witnessing firsthand how the capital markets landscape has transformed the complex dance of market trends, and innovative technology has redefined how the finance industry operates. With game changing innovations just around the corner, we now stand at across the world, one where it is more crucial than ever to understand the interplay between these realms. That's what we do here. We talk about current and future processes and technologies you need to be aware of moving forward.

Speaker 1:

The cloud has revolutionized the way business operates, bringing forth a wave of innovation that has transformed scalability, cost efficiency, flexibility and collaboration across industries far and wide. But when it comes to the financial sector, adopting this technology has been meant with some hesitance. In the labyrinth of finance, where regulations are intricate, compliance is paramount and institutional culture holds significant sway, the transition to the cloud has been a cautious one, however. Over the past few years, changes in the air, digital institutions are beginning to embrace the benefits cloud technology can offer. A survey conducted by Capco that a majority of bankers they spoke with anticipate a significant increase in cloud spending over the next few years. This shift signifies a growing realization within the industry that the cloud is not just a passing trend but a transformational force.

Speaker 1:

Joining us to discuss further is Elle Ellis of Amazon Web Services. In her current role, elle works with strategic capital markets technology partners in co-developing and executing go-to-market strategies to drive overall market adoption of partner solutions running on AWS. Before joining AWS, Elle spent her career in capital markets, specifically in public finance banking. of also Amazon Web Services. She's technology leader with over 25 years experience in financial services. In her current role at AWS, financial service partners on best practices cloud architecture. works closely with internal and external stakeholders to identify industry technical trends, develop strategies and execute them to help financial service industry partners build innovative solutions and services on AWS. And finally, Nestor Nelson, chief information officer and senior vice president at Numerixs. Nestor has been charged with establishing transformative processes and strategies to enable Numerixs to respond more to customer demands. Welcome everyone. Just to kick this off, Nestor, why don't we start with you and perhaps you can quickly describe the difference between on-prem delivery versus cloud.

Speaker 2:

Most people feel that they understand the difference. It's fairly obvious on a superficial level, having servers on customers' data centers, be it physical iron boxes versus virtualized hardware. However, on the cloud, it's not just virtual. It's also about the scalability, about automation, about provisioning, about scheduling. So there's a ton of differences between the two Numerixs. Being on this SAS journey over the last five to six years, it's a continual effort to modernize and make things much more efficient.

Speaker 1:

So, when I think back to the headlines in the trade rags over the past 10 years, at this point cloud was going to revolutionize the world, but cloud seems to be dominating the conversation today. El, why don't we start with you? What changes in either the desire or the interest in the cloud from financial institutions is occurring right now?

Speaker 3:

Yeah, thanks, jim. We are seeing financial services customers across all segments, whether it's banking, payments, capital markets or insurance. All those customers are accelerating their cloud adoption really to unlock that business value. Customers are leveraging AWS to modernize their data and analytics capabilities because it can really unlock those opportunities for innovation across the entire value chain. Let me give you a few examples. So the first is a customer can now create a 360-degree view of customer data that really, in turn, helps them provide a seamless omni-channel experience. And the second point that will resonate is organizations are now leveraging artificial intelligence and machine learning services to drive advisory on trading strategy or portfolio optimization. The third area is around high-performance computing, or HPC, where firms such as yours are really taking advantage to run their risk analytic calculations or do stress testing. And actually, as a matter of fact, AWS and Numerix have an excellent case study on this topic that listeners should definitely go check out.

Speaker 1:

So a little bit more on kind of the key benefits. You know what is being unlocked that organizations can really realize by moving to the cloud. This is for everyone. Maybe, kalyani, we could start with you.

Speaker 4:

Yeah, sure, basically, as Nestor pointed out in his conversations, right, cloud computing gives you the ability to spin up IT resources whenever you need them, rather than having to acquire them ahead of time or plan for your peak volume capacity.

Speaker 4:

You can scale up or scale down. You can experiment with new, innovative solutions without having to think about how am I going to put in all of this additional money upfront? You are only paying for resources that you are actually using, not really paying for resources ahead of time, even whether you use it or not. So that's encouraging a lot of cultural innovation in the firms, and I think that those are some of the benefits. And one of the other benefits that we see with our AWS customers specifically is our global footprint. If somebody, if a organization, wants to move their software from one region to another region or offer their software into other customers outside of their region, they can easily do that with a click of a button, sometimes right, which is not quite possible when you have an on-prem type of an infrastructure. Thinking about data centers, building the data centers All of that is a lot of inefficiencies.

Speaker 2:

Nestor anything to add. Numerix itself has seen, just by intrinsically modernizing and making our solutions cloud native, making them more efficient, now has opened opportunities for our customers to now explore and to do things that were not even possible before. And what do I mean by that? For example, there are some very lengthy risk calculations that are done at the end of the week. Now they're saying we'd like to do those daily and that just wasn't possible before just due to the sheer run times. Now these things that used to take, you know, 40 hours to run, run in under 10. So you can explore value there. Capital markets is insatiable. They just want more and more and more, and whatever availability there is, they'll consume it. And so Numerics has seen tremendous adoption in the scalability area, you know, using HPC, as it was mentioned, and unlocking that additional value for our customers.

Speaker 1:

Well, an insatiable appetite is probably good for AWS, I'm sure, and Al any other additional thoughts in terms of key benefits that you're observing.

Speaker 3:

Yeah, I think the key one that I want to drive home is you know, when you think about cloud computing, it's the on-demand delivery of IT resources over the internet. With this pay-as-you-go pricing model and the pay-as-you-go is, you are only paying for what you used, you're no longer paying for that anticipated capacity, and that, I think, saves organizations a lot of capital and a lot of resources in the long run.

Speaker 1:

Well, I want to step back and, , I mean I'll talk to you. You know the largest barrier to entry for many financial institutions has been around security. So how do cloud solutions and NONPREM solutions differ in terms of security and what steps are being taken to kind of mitigate those risks, especially kind of given the broader world we're living in at this point?

Speaker 4:

Yeah, so I can definitely speak about the AWS part of security. Right, in AWS, we believe security is a shared responsibility model. Aws takes care of security of the cloud and we expect our customers to take care of security in the cloud, and it also depends upon what customers are using, what AWS services are using, how they are configuring those services. We have best practices published in our well-architected framework. We have a security pillar that talks about different things that organizations can do as part of customer responsibility of security. You know, like data encryption, address data encryption and transit, or making sure that you're thinking about security at each layer, not just at the entry, but at you know, like once they come into the VPC, having security there, having security at your EC2 compute level, security at storage level, and we have tools also which will give your IT help about how to provision access to these resources, to the right resources at the right time for the right amount of time. You know you don't constantly have access to production environment or a development environment, for that matter, right, and thinking about those things and monitoring in real time, making sure that you have an instance response plan and reaching out and making sure that you are constantly monitoring your solutions, even the application development, for that matter. You know thinking about security even when you're building this code and thinking about code scans and building the pipeline, automating as much as part of it, taking out the humans from code pipelines and deployment pipeline. The whole DevSecOps piece is an important piece that the cloud brings to forefront.

Speaker 4:

Again, I've been in technology for more than 20 plus years. In the earlier days of my technology career I do remember we the pendulum is to be at one place where you know the traders will say, hey, I can't see this. And we would say, oh, can you check now? And we would make the changes in the database and say, can you just do the thing? You know? Can you see if things are working? And then we went to the other area where, you know, even for a small change, we had to go through an unlimited number of blockers to get permissions to make small code changes.

Speaker 4:

So ability to you know to react was not as easy. But in cloud you can react very easy. You can pretty much log whatever access people have and how they're using it and also, you know, see it. In addition, from a compliance perspective, speaking of financial services, aws has acquired 143 security compliance things we have. We are constantly audited by the third parties. We make those reports available to our customers through our AWS artifacts. So there's a ton of resources available for the customers on their cloud journey and making their cloud solutions secure for their customers and actually upping the game on security.

Speaker 1:

Well, you know it's funny. I'll digress just for half a second because it's a podcast and we can do that. I'm not going to name what financial institution, but up until 10 years ago they were still submitting reg reports on CD-ROM via FedEx, as crazy as that sounds. The other thing I'll just chat about for half a second was I was lucky enough years ago to go to an Azure data center. Sorry to bring up a competitor, but I swear to God, when they took us out I thought they were going to bring a black van throw hoods over our heads.

Speaker 1:

Apparently, the data center was obfuscated from Google Maps so you couldn't find it, and the get in it was like fortified, so tanks couldn't break in and whatnot. So, like the level of security. I'm sure AWS is the same, but the level of security just to even get in the building was absolutely insane, knowing what goes on in and around the cloud, but even protecting the cloud was pretty crazy. So anyway, nestor, I want to come back to you for a second. So obviously, the compute on demand, the IT resources you need, all wraps up in the concept of scalability, as L was talking about. So you know, perhaps you can give us a few minutes of Numerix is taking advantage of scalability for its diverse capital markets clients.

Speaker 2:

Let's just take a workload, a particular job or set of activities call it a batch process that you want to perform and that may need to scale. Meaning, let's assume you have 100,000 positions or 500,000 positions, you need to do a number of calculations on that and you need that to complete within a certain window of time, say from midnight to 6am, you know. So you need to scale out, you need to be able to take that job, parse it and dispatch it across a wide array of resources. So we've used as the case study will show we use AWS batch, we use EKS, which is a Kubernetes, managed Kubernetes, and we can take that job and we can parallelize it and fan it out and basically compute this. And to the earlier points, it's not just about being able to scale out, but being able to scale out efficiently. So how do you call upon demand all these resources? You know AWS has a pricing model to use what they call spot instances. So you basically bid for this and you get them at a discount rate versus reserving them and keeping them at your disposal on a 24 by 7 basis. So we do that and we do that cost effectively.

Speaker 2:

The second workload or paradigm I'd like to discuss is just through the fact that when you have the cloud, everything is about automation. It's about codifying how these resources are spun up, how they're shut down, and so now you may have a particular system that is configured a certain way to perform a certain set of computations. But you want to explore what if I change my parameters around certain models or certain data sets or market data? What would the results be like? Now, to do that same lengthy batch job, you would have to reconfigure that environment and you would have to deploy it. And what if you wanted to do that but not disrupt your production workload? Now you need to create a whole. Another second instance Well, with automation and all of our infrastructure is code, using cloud formation and other natures, we could just spin up an environment, perform those calculations, get those results and basically eliminate that environment. So it becomes ephemeral.

Speaker 1:

Hmm, that's interesting, nestor. Those sound like very strategic advantages to the cloud. So, kalyani, I want to come back to you for a second. You know it would be unfair of me if I didn't ask the question, but what are the biggest challenges for enterprises? And you know, moving to the cloud, so this answer may surprise.

Speaker 4:

It's not actually technical challenges. I think the challenges seem to be more of people and culture challenges. What I mean by that is you know the culture of innovation, as I was just talking to you about the culture of learning your constant year learning and you know planning out how to execute this thing. You're not going to make all decisions up front and have a perfect plan before you move your single workload to the cloud. So, changing from that mindset to doing the analysis of your portfolio, seeing what makes sense and starting with what can I do short term, what can I do medium term and what can I do in the long run? Right, how can I automate most of the things that I used to do manually?

Speaker 4:

And you know constant education, right, from a culture perspective, there's a lot of services that are coming into picture. There's new technologies that are rolling out. How can you take advantage of those new technologies? So I think the culture and people would be the biggest challenge. I would say keeping up with the technology and making use of the latest tools available to efficiently, you know service your customers. I think that would be your biggest challenge.

Speaker 1:

I want to dive into that just for a little bit more. You know, and I think back to let's call it the great GPU CPU debate and everybody was promoting the efficiencies of CPU, but then everything needed to be rewritten lack of availability to code and CUDA. You know, the cloud is evolving so fast. It seems. Aws has provided amazing resources to get people up to speed, but you know, where is the industry in terms of proficiency of individuals?

Speaker 2:

Yeah, so Numerix really addressed this head on. You know, it's where Numerix doesn't just adopt a cloud for itself as an ISV, as a SAS cloud solution provider. We're doing so on behalf of our customers. So it became very evident that we needed to invest in our employees. We underwent a series of training scenarios. We're actually still working with AWS on Skill Builder, which is their AWS digital platform for training, and we're seeking to get all of our engineers certified and I think the industry as a whole. If you just look at it, the number of people getting certified and just on resumes we see they're showing their certifications points to the industry widely seeking this. And again, our goal is to get, you know, 10 to 15% of the organization certified so that we can walk the walk, not just talk the talk.

Speaker 1:

So well. I want to bring it back here for a second. How would you say the landscape of cloud solutions has evolved in recent years, and what trends can we expect going forward?

Speaker 3:

Yeah. So I think that over the last few years we're now we're hearing from business leaders they need to move to the cloud and they want to move to the cloud, but it's how fast can they actually move? And that comes back to training and, you know, really leaning into what resources we, as a cloud provider, provide to our customers. But on top of this it comes with an incessant amount of choices to make and I think we're going to start to see cloud marketplaces evolve exponentially over the next few years to really help these business leaders make the better informed decisions and faster decisions. They now can go to one place, know that these vendors have been vetted and they can trust them and, plus, they're also going to realize some cost or efficiencies in the entire procurement process. So I think we'll see customers lean into cloud marketplaces, like the AWS marketplace and the vendors, because your customers now can, you know, adopt these solutions a lot quicker and your vendors can have them ready to deploy and they're easily managed.

Speaker 1:

So we've made it to the final question of this podcast and we call that the trend drop. It's kind of like a desert island question. So the question is if you can only track one current cloud focused trend new technology, new process, new integrations what would it be? And I'm going to go around the room and, while calling on anyone, I start with you.

Speaker 4:

Okay, I think I have to say Jenae, I write it's a new thing. But no, you know, even though it's a new thing, what within Jenae, specifically for me as a technologist, that excites me is the Amazon code whisperer right. The way it increases the productivity of developers from actually writing code that is generally always written right, you know, making it faster. I'm really curious as to how that can help the technologies and this can also help with some of the tasks that we are talking about automation and everything else. You know a lot of that can be, you know, spread up a large degree. So that would be mine.

Speaker 3:

I'm going to have to weave in machine learning, but before that I'm going to say real-time cloud infrastructure, because data is so. People want their hands on data right now. That is not going anywhere. But how we utilize a tool like machine learning integrations to really gain better insights and faster insights in that data, that's what's most exciting to me right now.

Speaker 1:

And finally Nestor.

Speaker 2:

Yeah, given it's one service, I'd have to jump on the bandwagon with the GenAI and, in AWS cases, bedrock in particular. There's just so many facets to it. You know how it's going to accelerate what our people do, whether it's automating and improving how we provision our infrastructure and operate the cloud at scale. You've got to remember Numerix is also hosting a myriad of environments on behalf of our customers, so we have an ever-growing footprint on the cloud. So operating the cloud at scale is very important to us and doing so efficiently, and some of the GenAI stuff is definitely helping us identify areas where we can further improve.

Speaker 1:

Thank you so much, Nestor, and thank you Elle and Kalyani. I really appreciate you joining us for today's conversation.

Speaker 3:

Thank you for having us. Yeah, thank you very much, Jim. Thank you.

Speaker 1:

Coming up next week. We speak with Broadridge about some of the more surprising findings in their annual digital transformation survey. It's insights you can't afford to miss. But first, if you enjoyed the podcast, make sure you hit the subscribe button, leave a comment, a like and check out our other episodes. Thanks for joining.