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A Public Reminder on the Private Cloud Debate

By Kaleigh Alessandro,
Tuesday, March 25th, 2014

Earlier this week, it was reported that Nasdaq was reconsidering its Amazon-based cloud product, FinQloud. According to the Financial Times, FinQloud has failed to gain significant traction in the marketplace amongst financial services firms including broker-dealers and exchanges. If Nasdaq pulls out of the deal with Amazon Web Services (AWS), it would be a major disappointment to Amazon, who is actively pitching AWS to large financial institutions and enterprises.
Whether the limited adoption of FinQloud is a sign of a product flaw or a larger industry trend, we feel it important to draw attention to a longstanding debate within the financial services industry – a debate that we’ve shared our thoughts on here on Hedge IT many times: public vs. private clouds.
It’s certainly possible that the slow adoption of FinQloud is a result of concerns over mass public cloud usage – a stern reality for many financial services firms who expect and demand that their critical applications and data be stored in a highly secure and available environment. Hedge funds and investment firms, in particular, cannot afford unexpected downtime, and unfortunately, we’ve seen several public cloud providers experience major outages in recent years. Just last week, Dropbox users logged in to find the service was unavailable, and Amazon and Google have both found their services in the headlines in recent years due to very large and public disruptions.
Security in the public cloud remains a bit of a question mark, as public cloud providers are still lacking in transparency and are less likely to disclose the specific security and compliance protocols that support their infrastructures. Particularly as regulatory bodies stress the importance of security measures in the world of heightened cybercrime (the SEC is holding a cybersecurity roundtable this week), it is imperative that investment firms leverage secure systems to power and protect their operations.
Service and support are also critical factors to consider when selecting a cloud provider. Hedge fund service providers have the experience and expertise to handle any IT issues that arise and are often available on a round-the-clock basis to meet the needs of their clients. Public cloud providers may have general support lines or customer service representatives available, but the odds that their expertise lies in financial services technology are slim. Any application or investment technology-related questions or problems would be easier answered by a provider whose business is designed to meet the industry’s unique demands.

To read more about the differences between public and private cloud environments and the considerations for each, take a look at some of our other resources:

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Categorized under: Cloud Computing  Security  Outsourcing  Hedge Fund Operations  Hedge Fund Regulation  Infrastructure  Trends We're Seeing 

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