From Financial Servicesto Finance as a Service -how clouds will transform bankingAugust 2010Version 1.0

Agenda

Cloud – yet another definition

Financial Services

Cloud Adoption 2010

Bank 2020

Recap

Questions?

2

What’s ‘cloud’ all about?

3http://www.slideshare.net/skillsmatter/simon-wardley http://www.youtube.com/watch?v=5Oyf4vvJyy4

FINANCIAL SERVICES

4

Market Data

5

Exchange

Exchange

ExchangeMarketData

Provider

Bank

Bank

Bank

Exchanges

6

Exchange

Bank

Bank

Bank

Bank

Bank

Hedge Fund

[MTF]

Multi Lateral Trading Facilities(MTFs)

7

Bank

Bank

Bank

Bank

Bank

Hedge Fund

Prime brokerage

8

Hedge Fund

Hedge Fund

Hedge Fund

Exchange Clearing Settlement

Bank

Ordermanagement

Positionkeeping

ClearingAnd

Settlement

Primebrokerage

Algorithmic trading

9

Hedge Fund

Mutual Fund

Hedge Fund

Exchange Exchange Exchange

Bank

AlgorithmicTradingSystem

Bank as a Service Bundle

10

Client

Client

Client

Exchanges Clearing Settlement

Bank

Equities

Derivatives

FixedIncome Reference

Data

Validationand

Enrichment

RiskManagement

FinancialControl

Clearingand

Settlement

CLOUD ADOPTION 2010

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Public Cloud

Lots of experiments on IaaS (such as EC2) for high compute low data applications like Monte Carlo simulation (which is used a lot for derivatives pricing & risk management)

PaaS yet to gain real traction (but it’s newer than IaaS and SaaS)

SaaS is starting to find its way from low risk niche to mainstream• HR (learning management, payroll)

• Expenses•CRM

•email next?

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Held back by

Transition risks•Confusion•Governance•Trust•Security•Transparency

Outsourcing risks•Suitability•Competition•Lock-in•Second source•Control

13

Regulation /Compliance

Private Cloud

Banks use compute the same way that Aluminium plants use electricity

• Economics of utility model look different when you consume at sufficient scale

BUT

• You can learn a lot from the companies that are industrialising the utilities and disrupting the marketplace• Book shops don’t care about the

profitability of the IT industry (and neither should banks)

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Industry Cloud

Trading venues (exchanges/MTFs) are industry utilities

•Many common characteristics with public clouds

BUT

• Avoid many of the risks

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WHAT HAPPENS WHEN THE CLOUD BECOMES THE PRIME BROKER FOR THE TIER ONES?

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Bank as a Service Bundle

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Client

Client

Client

Exchanges Clearing Settlement

Bank

Equities

Derivatives

FixedIncome Reference

Data

Validationand

Enrichment

RiskManagement

FinancialControl

Clearingand

Settlement

Clearing Settlement

Bank 2020

18

Bank

Service cloud

Client

Client

Client

Exchanges

Equities

Derivatives

FixedIncome Reference

Data

Validationand

Enrichment

RiskManagement

FinancialControl

Clearingand

Settlement

RECAP

19

Cloud is compute as a commodity

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http://www.slideshare.net/skillsmatter/simon-wardley http://www.youtube.com/watch?v=5Oyf4vvJyy4

Banks are compute based services

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Client

Client

Client

Exchanges Clearing Settlement

Bank

Equities

Derivatives

FixedIncome Reference

Data

Validationand

Enrichment

RiskManagement

FinancialControl

Clearingand

Settlement

Clearing Settlement

That will be hollowed out byCloud Computing

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Bank

Service cloud

Client

Client

Client

Exchanges

Equities

Derivatives

FixedIncome Reference

Data

Validationand

Enrichment

RiskManagement

FinancialControl

Clearingand

Settlement

QUESTIONS?

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