In Conversation with Funds Europe: Achieving Operational Resilience with the Cloud

What does it take to achieve lasting operational resilience in the technological era?

Recently, FundGuard President John Lehner sat down with Nick Fitzpatrick, editor of Funds Europe Magazine to discuss this very topic.  

When looking at the state of technology in the asset management space, the board is varied. Some companies have embraced the cloud-native approach, while others still need to migrate to more modern systems. One theme is clear, however—digital transformation is absolutely essential. 

Check out our summary of key takeaways from John’s discussion with Nick. 

1. Getting your business model straight comes before building the tech stack

Your business model and data strategy need to take priority over building a new tech stack. New technologies drive industry excitement, which can lead to fast adoption of new solutions and tools. However, many businesses may rush into technological investments without first fully understanding what specific purposes different technology can tackle and the benefits it can provide. 

Seek external partnerships that can help your organization assess the key problems to solve. From there, you can actually begin dissecting those problems and determining what tools are the best fit for accomplishing an effective solution. A business technology partner can aid you in creating a well-rounded business strategy that supports your operational and financial objectives. 

2. Following the money leads to cloud computing

In the world of technology, one golden rule is to “follow the money,” by looking to what other businesses and industry leaders are investing in to understand which technologies are essential to implement first. 

And when you follow the money in financial technology, it leads you to cloud computing. 

These days, hardly anyone is building new on-premise data center capabilities from the ground up. While we may see some attempts at retrofitting to extend the life of legacy applications, we are witnessing all the new money funnel into the cloud. 

The same is true across multiple industries, not just the financial services sector—for years there has already been an ongoing shift to the cloud being used in everything from healthcare and education to production and manufacturing. 

The scale that cloud-native solutions can offer brings asset managers and fund managers into a more modern realm of financial management. Aside from the technical advantages of tremendous scalability and great burst capabilities, cloud computing also represents an evolving mindset around industry-wide collaboration. 

“What cloud really enables is a collaboration model in solving problems together as an industry in a way that people couldn’t do before because literally you’d go and get your technology, buy it, and sort of bring it home or bring it inside of your four walls and it became isolated. Now, you’re not doing that. You are going to the technology, you are coming to the solution.”

—John Lehner, FundGuard President

Migrating to the cloud allows your organization to move into a mutually beneficial space where users can enjoy the same updates and upgrades to software without sacrificing customization. The cloud supports widespread operational resiliency through its rich functions that create a more connected financial and technological ecosystem for the asset management industry.  

3. The cloud makes scalability a no-brainer

Scalability comes into play at so many points in back-end processes that to ignore it would be to severely neglect your stability as a business. The cloud can help to vastly increase your scalability in many ways, including making it easy and efficient to implement technology enhancements and upgrades.  

Legacy systems cannot measure up to the volume of data being processed on the cloud and the speed at which it that processing occurs. Cloud computing is redefining the requirements for data delivery and establishing more mature, complex systems that employ data and analytics in all new ways. 

As John puts it, “Scalability is everything.” 

A standalone system, even one that is less traditional and more modern, cannot hold a flame to the advantage of implementing a cloud-native strategy across the entire enterprise. 

On-premise systems are immensely difficult to scale up quickly or cost-effectively due to the need to purchase additional hardware and software. Cloud computing eliminates this constraint by providing on-demand access to virtually unlimited resources and real-time software updates.

4. Cloud-native tech offers a more regulated and standardized approach

One compelling question that came up during the Funds Europe talk revolved around the willingness of asset management firms and asset servicers to trust the cloud. 

While our industry has been slower than others to adapt due to our inherent risk-averse DNA, many more firms are already outsourcing their technology. Working with third-party providers and reducing reliance on on-premise systems has been an ongoing trend for years.

What’s different about cloud computing is that it actually offers a more secure, regulated, and standardized approach than the more outdated outsourcing strategies. 

Using software hosted by third parties that cannot easily or freely share information between their systems results in an inconsistent data experience that can end up costing organizations in the long run. Cloud-native platforms, like FundGuard, offer a more streamlined environment that can increase both operational consistency and resiliency. 

You can lose substantial functionality simply by not migrating to the cloud, such as the lack of adequate failover capabilities or a dual-cloud provider model. All the while, your patchwork software strategy can fail to even give you the same connectivity or real-time access to data that the cloud offers. 

It’s no longer really a question of whether a cloud migration is necessary but, instead, where it falls on your priority list. Your IT team knows it, your managers know it, it all comes down to taking the time and effort to fit a migration into your business agenda. 

5. Organizations need to take the big leap, not incremental steps

You know what your business model is, and you know what technologies you want to implement. The key now is to not waste time by focusing too heavily on incremental change.

Cloud migrations can be a huge leap forward, particularly for organizations still working with decades-old, patched-up technology. Businesses built from the ground up in the cloud have an immediate inherent advantage when it comes to utilizing cloud capabilities quickly. 

We’re seeing a fairly unanimous consensus in our industry that the cloud is the future, so you are only slowing your business down by choosing not to dive in all the way. Remember that the cloud empowers a far more collaborative environment where you can benefit from the same technological advancements as your peers, even those who may otherwise be competitors. 

Where to next on the road to industry-wide operational resilience

Collaborative cloud-native partnerships have created a new horizon for the asset management industry. 

At FundGuard, we are incredibly fortunate to be a cloud-native platform built from the ground up using a state of the art tech stack. Our approach to building and delivering software is much different than the historical method. We are focused on creating a solution that can serve as a utility for the entire industry and bring all organizations onto an even playing field of resilience and consistency. 

Global businesses continue to commit to this journey with us, expanding our partner ecosystem even further. We see scalability becoming an even greater issue and priority over the next few years, which is likely to push even more organizations to the flexible cloud environment. 

You can watch John’s full Funds Europe interview here.

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