While some traditional financial services companies have more slowly transitioned to the cloud, capital markets firms have embraced cloud computing across their entire value chains — front-, middle-, and back-office. We wanted to understand the dynamics behind this rapid adoption, the most common use cases, and the types of technology most in use, particularly as it relates to market data. Google Cloud commissioned Coalition Greenwich to survey 102 institutional capital markets professionals — at exchanges, trading systems, data aggregators, data producers, asset managers, hedge funds, and investment banks — in the United States, Canada, France, Germany, Italy, the Netherlands, Switzerland, and the United Kingdom. 

Our research found that while there are many drivers, demand for easier accessibility is fueling widespread adoption of cloud-based market data services, and associated trading infrastructures, across the buy side and sell side. In fact, 68% of sell-side and buy-side users find it critical for market data providers to offer public cloud-based data services. At the same time, exchanges, market data providers, aggregators, and trading systems are embracing the cloud as a delivery model by offering access to data directly via their own cloud services, APIs or partners.

Here were five noteworthy takeaways from the study: 

1. Cloud services are becoming ubiquitous for data delivery. Today, the cloud is pervasive, with 93% of exchanges, trading systems and data providers offering cloud-based data and services, according to surveyed executives. Moreover, 100% of those surveyed intend to offer new cloud-based services, such as derived data, in the next 12 months.

2. Commercial and investment banks are offering additional connectivity, real-time data feeds, and trading applications delivered via the cloud,demonstrating that it’s not only exchanges, trading systems, and data providers that are moving rapidly to the cloud. Internal use cases abound as well, with 67% of those surveyed consuming cloud-deployed market data, primarily for data analytics. 88% of surveyed sell-side firms intend to consume cloud-based market data services, with digital transformation, data science and quant research as the top use cases.

3. Buy side firms will consume even more cloud-deployed data. Today, 90% of surveyed buy-side firms are consuming cloud-deployed market data, mostly for portfolio management. 70% of buy-side firms intend to consume more public cloud-based market data services in the next 12 months, adding services such as compliance and regulatory reporting.

4. AI/ML, powered by cloud, is moving out of the pilot phase and into mainstream use. Today, 50% of exchanges, trading systems, and data providers are offering data products or services powered by AI/ML, and of those, 42% intend to offer AI-powered trade execution and trading analytics services in the next 12 months. Within commercial and investment banks, 55% said they are currently using AI/ML in the cloud, and while that was true for only 14% of overall buy-side respondents, 44% of large buy-side respondents are using it.

5. Exchanges, trading systems, and data providers are prioritizing public cloud for internal insights. 71% of these firms are using the public cloud, mostly for data transmission, processing, analysis, and long-term data storage. Over the next 12 months, 33% of new public cloud workloads will focus on data mining, data insights and advanced analytics, while 28% of new AI/ML tooling and infrastructure investments will focus on faster analytics and risk reviews, and 27% on data quality maintenance.

“We see new, dramatic shifts on the adoption of cloud across market data,” said David Easthope, Senior Analyst for Coalition Greenwich. “And we expect further proliferation of cloud-based services and greater consumption across the trading and investing lifecycle.”

Conclusions and future predictions

Based on the survey results, Coalition Greenwich predicts five following trends over the next 12 months:

1. Exchanges and trading systems will continue to launch a wide array of new cloud-based and possibly cloud exclusive data services across derived data, end of day data, reference data and pricing data.
2. Data providers will launch new data products such as pre-trade analytics powered by AI/ML in the cloud.
3. Commercial and investment banks will offer additional connectivity, real-time data feeds, and trading applications delivered via the cloud.
4. Buy-side firms will consume even more cloud-deployed data, including real-time market data, portfolio management data, and risk analytics.
5. Exchanges, trading systems and data providers will explore proof-of-concepts around core systems on the cloud. Improvements to AI/ML tooling or infrastructure will ramp up as firms seek more rapid responses to risk initiatives.

To learn more about these findings, download our two full reports, The Future of market data: Distribution and consumption through cloud and AI and Exchanges and data providers: Prioritizing the cloud and AI for internal insights or our short infographic.

Research methodology

The survey was conducted online by Coalition Greenwich on behalf of Google Cloud from March 2021 to April 2021 among 102 executives in North America (n=82), EMEA (n=17) and other (n=3) who are employed full-time and who are participants or influencers in decisions around cloud and/or senior management with a role at a company which is an institutional asset manager, hedge fund, alternative investment manager, exchange and/or trading system, information provider, information aggregator, or other asset manager/asset owner. The survey included wide perspectives from a range of firm size and asset class focus, including equity, fixed income, FX, commodities, multi-asset, and other asset classes.

Foot Notes

1.  We defined market data as direct feeds, consolidated feeds, terminal and desktop products, security and reference data, pricing data, historical data, alternative data, and index data.

Road construction is booming in India. A recent report prepared by the India Brand Equity Foundation—a trust established by the Department of Commerce—pointed out that in FY 2019 alone, the country added 10,855 kilometers of highways to a road network that spans 5.89 million kilometers. This network is the second largest in the world and transports 90% of passenger traffic and 64.5% of all goods in the country.

The Indian Government has also earmarked road construction as key to plans to increase the nation’s GDP to $5 trillion in coming years, targeting road construction worth $212.8 billion in the two years from April 2020.

G R Infraprojects Limited is well positioned to support the government’s program. The business, which started as a contractor building roads in rural villages in India, now specializes in road engineering, procurement, and construction (EPC), a model whereby private construction firms build roads funded by the government.

The business now undertakes the processing of bitumen, manufacture of thermoplastic road-marking paint and road signage, and fabrication and galvanizing road-crash barriers. Its in-house integration model includes a design and engineering team, as well as manufacturing facilities in Rajasthan, Assam, and Gujarat.

The business recently expanded into rail—another area expected to benefit from extensive government investment—with its competencies including earthworks, materials supply, track lining, and bridge construction.

In this environment—and despite the economic impact of the coronavirus pandemic—G R Infraprojects Limited aims to substantially increase turnover and manpower over the next five years.

Best-in-class infrastructure key to success

Digital transformation is key to enabling growth while best-in-class IT infrastructure is one of the foundations on which the business seeks to build success.

G R Infraprojects Limited’s digital initiatives include deployment of a new document management system and corporate systems that enable remote monitoring, live tracking, effective real-time communication, and efficient data management.

Providing a scalable, reliable cost-effective infrastructure

But most important of all is providing a scalable, reliable, and cost-effective infrastructure to support a business-critical SAP enterprise resource planning system. Over the last few years, versions of SAP have enabled the organization to digitize processes and seamlessly run business-critical functions such as inventory management and finance.

G R Infraprojects Limited initially went live with SAP ECC6.0, with a few hundred team members using the system for business-critical tasks such as tracking stock level and movement and generating financial statements and reports for review and action.

“Google Cloud is a very big brand, so we were easily able to secure the trust from our executive and business teams to run an important system such as SAP S/4HANA on the platform.”—Sachin Kumar Agarwal, Head, Transformation, G R Infraprojects Limited

Lowering maintenance costs

However, as G R Infraprojects Limited grew, projects proliferated, and new markets emerged, the business elected to move to the cloud from an on-premises infrastructure. “We wanted to move because there were so many maintenance costs in on-premises solutions and cloud provided convenience to IT and the broader organization,” explains Sachin Kumar Agarwal, Head, Transformation at G R Infraprojects Limited.

The business also wanted to move to SAP S/4HANA to take advantage of features such as AI, advanced analytics, and machine learning to transform business processes. The system runs on the HANA database, an in-memory database with fast processing speeds and a simplified data model.

G R Infraprojects Limited selected Google Cloud to run SAP S/4HANA because, Sachin says, it is “much better than any other platform,” incorporates a wide range of features, and meets uptime requirements. The cloud service could also scale to support forecast growth without a sharp increase in cost.

Furthermore, Sachin adds, “Google Cloud is a very big brand, so we were easily able to secure the trust from our executive and business teams to run an important system such as SAP S/4HANA on the platform.”

“With Google Cloud, our speed and availability are controlled and optimized day by day. With such a scalable and dynamic platform, we are very happy with the performance.”—Sachin Kumar Agarwal, Head, Transformation, G R Infraprojects Limited

Successful transition with Infrabeat

G R Infraprojects Limited completed the project with assistance from partner InfraBeat over three months and SAP S/4HANA on Google Cloud went live mid-2019. “Our dedicated SAP team worked closely with Infrabeat to deliver the project successfully,” says Sachin. “We needed an experienced partner to assist with the implementation process and Infrabeat performed that role admirably. Both teams supported each other and worked to plan to deliver a great result.”

SAP S/4HANA runs on an infrastructure comprising virtual machine instances delivered through Compute Engine, Cloud Storage, and Cloud NAT to enable the secure transmission and receipt of packets to and from the internet.

G R Infraprojects Limited estimates the cost of running SAP S/4 HANA in Google Cloud is significantly lower than on alternative infrastructure options—freeing up budget for other business priorities.

In addition, moving SAP S/4 HANA to infrastructure as a service through Google Cloud has eliminated the need to assign internal team members to infrastructure management, allowing them instead to focus on higher-value activities.

Google Cloud also incorporates the security needed to protect the data and processes of SAP S/4 HANA from intrusion or disruption and ensure the uptime and continuity required of a business-critical system.

Optimized speed and availability

G R Infraprojects Limited’s decision to run SAP S/4 HANA on Google Cloud is delivering benefits on a daily basis. “With Google Cloud, our speed and availability are controlled and optimized day by day,” says Sachin. “We are very happy with the performance.”

Success with SAP S/4HANA has helped the business decide to move its remaining apps and data to the cloud when its on-premises servers and other equipment reach end of life. G R Infraprojects Limited is already running Active Directory in Google Cloud and Sachin says the cloud platform’s “fast and excellent services” made the decision easy.

“There are definitely instances of various upgrades of our systems and within the organization, and as we talk about our application and mobility requirements, we see Google Cloud playing a crucial role.”—Sachin Kumar Agarwal, Head, Transformation, G R Infraprojects Limited

Adding value

As G R Infraprojects Limited grows, Sachin adds, the business expects Google Cloud to continue to add value. “There are definitely instances of various upgrades of our systems and within the organization, and as we talk about our application and mobility requirements, we see Google Cloud playing a crucial role.”

Retail will forever be an industry that must constantly reinvent itself in response to, and anticipation of, ever-changing consumer demands.

Digital transformation is fueling these changes and we’ve previously spoken about how businesses including Ulta Beauty and Kohl’s are taking advantage of Google Cloud to put data at the center of what they do and deliver the best possible shopping experience and product offerings for their customers.

Leveraging Google Cloud machine learning platform, Sainsbury is able to develop predictive analytics models to spot trends and adjust inventory, providing shoppers with a better experience. 

Sainsbury’s, one of Britain’s best-known supermarkets, is another great example of a business transforming the way it engages with its customers with the cloud.

With over 150 years of service, Sainsbury’s vision is to be the most trusted retailer, where people love to work and shop. It makes customers’ lives easier, by offering great quality and service at fair prices. 

The food industry and the way that customers shop is rapidly changing. From foodie hashtags on Instagram, to the latest cooking fads, customers want to stay connected to the latest trends and Sainsbury’s is empowering them do that.

To help Sainsbury’s achieve this goal, its Commercial and Technology teams, in partnership with Accenture, are building cutting-edge machine learning solutions on Google Cloud Platform (GCP) to provide new insights on what customers want and the trends driving their eating habits.

With the help of Google Cloud Platform, we are generating new insights into how the world eats and lives, to help us stay ahead of market trends and provide an even better shopping experience for our customers.
–Phil Jordan, Group CIO, Sainsbury’s 

Sainsbury’s solution relies on data from multiple structured and unstructured sources. Using Google Cloud’s powerful cloud-based analytics tools to ingest, clean and classify that data, and a custom-built front-end interface for internal users to seamlessly navigate through a variety of filters and categories, Sainsbury’s is able to gain advanced insights in real time.

As a result, Sainsbury’s has been able to develop predictive analytics models to spot trends and adjust inventory, providing shoppers with a better experience. 

Phil Jordan, Group CIO of Sainsbury’s believes this project will have a big impact.

“The grocery market continues to change rapidly. We know our customers want high quality at great value and that finding innovative and distinctive products is increasingly important to them. With the help of Google Cloud Platform, we are generating new insights into how the world eats and lives, to help us stay ahead of market trends and provide an even better shopping experience for our customers.” 

This project is also a great example of the successes Google Cloud customers have when they work with the company’s partners.

“We’re delighted to partner with Google Cloud to help the Sainsbury’s Commercial team apply predictive analytics to the identification of new and emerging trends in grocery,” says Adrian Bertschinger, Managing Director for Retail, Accenture.

“The food sector is experiencing significant, rapid disruption, and this new, cloud-based insights platform will help Sainsbury’s identify trends much earlier and adapt their product assortment in a faster, more informed way—all for the benefit of customers.” 

Whatever the next food or shopping trend may be, Sainsbury’s is looking to the cloud to help them stay a step ahead.