For many years, it was commonly accepted that the financial services sector would never be able to widely employ enterprise cloud platforms because of concerns over security and increased pressure from regulators. However, in the past few years, capital market adoption of cloud services has increased greatly, and the use of private clouds seems to be favored. As a recent report from Everest Group stated, “there seems to be an overwhelming preference for private clouds across workloads.”

The buy side of the financial services sector currently has more cloud service integration, with an increasing number of order management systems offered by third parties as hosted and managed services. Portfolio management systems are also commonly hosted services and exist now almost exclusively in the cloud, according to research by Ovum.

“The capital markets are set to increase investment in cloud services, continuing the trend of technology adoption in the industry,” read an Ovum report from October 2013. “New research from global analysts indicates that, due to improvements in cloud security and a wider variety of applications, investment in cloud, by both the buy side and the sell side, is set for further growth. The research indicates that although the capital markets aren’t fully integrated with the cloud, this situation is set to change in the coming years.”

Private cloud offers many benefits 
Organizations in the financial services sector have found that cloud platforms, particularly dedicated enterprise solutions, offer multiple benefits. One of the biggest is the scale offered by third-party providers. Cloud service providers maintain millions of servers, while the four largest U.S. banks together only control around 350,000 servers, InformationWeek reported. Adding additional storage capacity and changing data’s location is much simpler with a cloud service provider, as they simply have better capabilities.

Security is another benefit of a private cloud platform, and one that has gotten better with time. Private cloud solutions offer greater levels of security because an organization’s information is stored on dedicated servers, instead of lumped together with many other companies’ data. Compliance regulations are also much easier to meet with a private cloud platform, as it is easier to install governance software and follow guidelines when no other groups have to be involved in the decision making.

Financial services organizations that implement a cloud solution will also notice greater agility in business dealings. Utilizing the cloud allows companies to move into new markets more quickly and adapt core businesses processes around new opportunities as they present themselves. Enterprises can also be more agile through the cost-effective aspect of the cloud. Businesses can go directly to their cloud service provider for their infrastructure needs, cutting out the middleman and building a platform that meets exact specifications.