The hedge fund industry is entering a new era of cloud computing. In 2023, advanced cloud technologies and services tailored specifically for hedge funds drive tremendous opportunities and disruptive challenges. Cloud innovation is accelerating, and hedge funds must adapt quickly to harness competitive advantages.
Here are some of the top cloud trends impacting hedge funds right now:
Hybrid Cloud Adoption
In 2023, more hedge funds are adopting hybrid cloud architectures combining private cloud and public cloud services. A hybrid approach allows you to run sensitive workloads in a private cloud while leveraging scalable public cloud services such as AI and analytics.
With a hybrid model, you maintain control over critical systems and data while benefiting from the flexibility and innovation of the public cloud. According to Flexera, 72% of enterprises have a hybrid cloud strategy. Migrating infrastructure, apps, data, and workloads between cloud models gives you the best of both worlds.
Using multiple public clouds rather than relying on just one is becoming more popular for hedge funds in 2023. A multi-cloud architecture improves resilience by avoiding vendor lock-in and enables you to leverage unique services from different providers, including AWS, Microsoft Azure, and Google Cloud.
You can also negotiate better deals and pricing when providers have to compete for your business across clouds. According to Flexera, 87% of respondents adopted a multi-cloud approach.
One of the biggest cloud trends is building new apps and systems specifically designed for the cloud from the ground up, known as cloud-native development. Legacy apps designed for on-premise servers don’t take full advantage of cloud elasticity and scalability.
Cloud-native apps use microservices architecture, containers, serverless computing, and other cloud services to be highly resilient, secure, and scalable. According to Gartner, over 95% of new digital workloads will be developed and deployed on cloud-native platforms by 2025.
Industry-Specific Cloud Solutions
In 2023, tailored SaaS solutions for hedge funds leveraging the cloud are emerging. These address challenges such as risk management, portfolio optimization, regulatory compliance, data security, and RPA process automation.
SaaS solutions built specifically for the finance industry can integrate smoothly with your tech stack and workflows. They can comply with regulations right out of the box rather than requiring extensive customization.
Industry-specific solutions allow you to leverage the latest fintech cloud innovations without the costs of in-house development.
Cloud Managed Services
More hedge funds are turning to managed service providers (MSPs) in 2023 to handle time-consuming tasks such as cloud migrations, implementations, system upgrades, security monitoring, and optimization.
Working with an experienced MSP gives you access to a deep bench of cloud experts so you can focus on core business priorities. MSPs stay on top of the latest cloud advancements and are accountable for cloud performance, uptime, and security.
Cloud Security Advances
In 2023, significant improvements are occurring in cloud security tools and best practices tailored specifically for hedge funds. This includes managed detection and response (MDR) services powered by AI to identify and remediate threats quickly.
Multi-factor authentication, encryption, privileged access management, micro-segmentation, and advanced endpoint protection all help make cloud environments more secure. Work with your MSP to implement the latest hedge fund cloud security defenses, policies, and procedures based on industry best practices and regulations.
Cloud Compliance Automation
Automating compliance processes using cloud technologies is reducing risks and costs associated with GDPR, SEC rules, SOC2 audits, and other regulations. This includes using tools such as Cloud Access Security Broker, or CASB, and Cloud Security Posture Management, or CSPM, to detect compliance risks and vulnerabilities in real-time across hybrid cloud environments.
Compliance automation is faster and more accurate than manual processes, freeing up your staff for more strategic initiatives while reducing audit preparation timelines.
Cloud Analytics and AI
Advanced analytics and AI solutions based in the cloud are enabling hedge funds to derive insights from big data, backtest investment models, and optimize complex quantitative strategies. The scale, acceleration power, and on-demand nature of the cloud are ideal for compute-heavy workloads such as Monte Carlo risk modeling, machine learning algorithms, and alternative data analysis. Cloud analytics allow you to quickly process large, diverse datasets and handle fluctuations in workloads.
Quantum Computing Access
In 2023, hedge funds are starting to experiment with quantum computing power through cloud services such as AWS Braket, Microsoft Azure Quantum, and Google Quantum AI. Quantum represents the next evolution of computing with the ability to solve optimization, risk analysis, and machine learning problems that are intractable for classical computers. While still nascent, quantum in the cloud will allow hedge funds to evaluate use cases and prepare for the profound disruptions to come.
More hedge funds are also adopting hyper-converged infrastructure (HCI) in 2023 to simplify cloud operations. HCI converges storage, computing, virtualization, and networking into a single software-defined system managed through a unified interface.
This cloud model streamlines infrastructure deployment, scales efficiently, and reduces operational complexity compared to traditional three-tier architecture. According to IMARC Group, by 2028, the hyper-converged infrastructure market will be valued at $37.1 billion, from $9.2 billion in 2022.
Leverage the Cloud’s Full Potential with Expertise from SeaGlass Technology
Hedge funds are poised to derive tremendous value from emerging cloud trends in 2023. From hybrid cloud adoption to hyper-converged infrastructure, the cloud offers innovative capabilities to improve operations, analytics, security, and more. However, the scale and complexity of leveraging these technologies can pose risks if not executed thoughtfully.
SeaGlass Technology’s team of cloud experts helps hedge funds such as yours navigate this pivotal technology shift. We work closely with your hedge fund to understand your needs and constraints before architecting tailored cloud solutions. Contact us today at (212) 886-0790 or online to discuss how advanced cloud technologies can start driving your competitive edge.