Cloud

How Are U.S. Capital Firms Using the Hybrid Cloud?

More of these organizations are combining public and private cloud to enhance their security and innovate with artificial intelligence.

J.P. Pressley

J.P. Pressley is a contributing writer to BizTech magazine and an editor at Manifest.

U.S. capital firms are implementing more hybrid cloud solutions to address a variety of business challenges, including disaster recovery, regulatory compliance and advanced analytics. In fact, a recent PricewaterhouseCoopers report finds that two-thirds of financial services organizations are turning to the cloud for growth and innovation.

“Organizations are actively investing in cloud technology due to its potential to foster innovation, create market disruptions, and enhance customer retention in order to gain a competitive edge,” said Milind Govekar, distinguished vice president analyst at Gartner, in a press release. Here are three ways U.S. capital firms are leveraging hybrid cloud today.

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1. Hybrid Cloud Can Accelerate Disaster Recovery

The hybrid cloud enables organizations to store large amounts of data in public and private clouds. This mitigates the need for more expensive on-premises backup servers and keeps essential information available anytime, giving IT leaders business continuity.

Today roughly 20 percent of all global attacks target financial firms. Hybrid cloud is proving to be one of the most effective defenses. One of the reasons a hybrid cloud strategy is so effective for backup and disaster recovery is because it offers banks “a modular, interoperable, intelligent infrastructure with embedded risk management, security, and compliance,” according to a recent IBM report. In a hybrid cloud model, “applications are ’containerized,’ that is, configured according to set standards that enable the software to be run on any type of physical infrastructure.”

This is particularly advantageous for capital firms because rapid failover and recovery processes mean less downtime and a lower risk of financial losses.

DISCOVER: Upgrade your capital firm’s security solutions.

2. Hybrid Cloud Can Help Banks Improve Data Compliance

U.S. capital firms face stringent regulatory requirements regarding data storage, security and privacy. These requirements keep evolving in relation to rising technologies, such as generative artificial intelligence (AI).

Samuel Levine, director of the Federal Trade Commission’s Bureau of Consumer Protection, speaks to this in terms of the latest privacy and data security update from the FTC: “We have worked vigorously to ensure that the law has equal force across the digital ecosystem, rising to the challenges presented by new technologies and seeking meaningful remedies that establish critical standards for protecting consumers’ information.”

20%

The approximate percentage of global cyberattacks that target financial firms

Source: imf.org, “Rising Cyber Threats Pose Serious Concerns for Financial Stability,” April 9, 2024

Banks have a better chance of staying compliant because hybrid cloud offers a built-in set of data security features. Financial firms can maintain sensitive data and customer information on-premises while leveraging public cloud services for other workloads and applications.

Taking full advantage of the hybrid cloud also means embracing a new mindset. This “requires breaking down silos between traditional on-premises data center staff, who tend to be focused on hardware, and the cloud experts,” writes Brian T. Horowitz in a previous BizTech article.

It’s also about training “employees to have a modern serverless architecture strategy rather than taking a classic system administrator approach,” Neil Graver, executive technology strategist at CDW says in that article.

3. Hybrid Cloud Can Help Banks Perform AI Investment Analyses

Financial firms are also taking advantage of the hybrid cloud to deploy AI and machine learning analytics tools. According to McKinsey, many CTOs say generative AI is transforming ROI in the cloud. Generative AI thrives in the cloud because large language models can sort diverse data sets from different locations and scale more easily on one unified platform.

This is a key reason capital firms are choosing the hybrid cloud. “For investment management firms, AI can provide machine learning algorithms to collect and analyze large amounts of data, predict prospects and price trends, and (give notice to) investors at any time,” Gracy Chen, managing director at Bitget, tells U.S. News and World Report.

JPMorgan Chase, Morgan Stanley and Vanguard Group are among the financial firms already using generative AI for asset management and investment analysis, while BNY Mellon and Fidelity International are leveraging Google Cloud and Amazon Web Services cloud-based AI platforms. Experts predict that many more banks are set to join this trend.

If U.S. capital firms want to have a competitive edge in the market, cloud is nonnegotiable. “With cloud computing becoming an integral part of business operations in 2028, CIOs and IT leaders will have to implement a highly efficient cloud operating model in order to achieve their desired business objectives,” Govekar said in the Gartner press release.

UP NEXT: Boost operational efficiency with these artificial intelligence tools.

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