The buy-side is leading the way with cloud adoption as a result of budget constraints, with even order management systems (OMS) likely to make the move, according to research by technology consultancy firm Ovum.
The research shows both buy- and sell-side are investing heavily in cloud services, and other financial market firms are also set to increase spending on IT infrastructure.
Currently, the buy-side has more integration with cloud services, according to the Ovum report. OMSs are increasingly being hosted and managed by third parties, rather than in-house, although they are not yet wholly cloud services. And portfolio management systems (PMS) are now commonly hosted solely in the cloud.
“The buy-side tends to be an easier target for the cloud than the sell-side, given that more of its participants are smaller firms with limited IT budgets,” Rik Turner, senior analyst, financial services technology, Ovum, who conducted the research, said.
“That said the sell-side is changing. With budgets and headcount under more constraints since the global financial crisis, there are clearly opportunities on that side of the business too.”
Turner found investment in cloud services is set for further growth as a result of improvements to cloud security and the wider variety of applications available.
Some market participants see the benefits of using hybrid clouds, which is a private cloud hosted by a third-party, according to Turner. However, there are still obstacles to overcome such as lack of standards.
“Cloud services adoption in the capital markets has increased in the last few years. In the future, there will be an even faster uptake of cloud services,” he said.
“Although the process of migrating services to the cloud is often driven by cost constraints, there is also now a dimension of preparing a platform for the sector’s future evolution.”