Cloud-Native Architectures in Investment Banking: Transforming Securities Processing and Cross-Border Payments

Abstract

The financial services industry is facing an unmatched technological change in the way investment banking activities are being transferred to the cloud-native microservices infrastructure. This change is a response to such critical operational issues as the rapid increase in the volume of transactions, the changes in the regulatory environment in various jurisdictions, and the need to have real-time processing solutions. Cloud-native applications that are implemented on platforms such as Microsoft Azure, AWS, and Red Hat OpenShift provide the ability to scale horizontally, deploy services as independent entities, and isolate faults, which is not possible with monolithic systems. By deploying event-driven computing in securities processing platforms, it is possible to remove the delays of a batch processing system, allowing settlement of securities on the same day and limiting the exposure of counterparty risks. The cross-border payment systems based on SWIFT gpi standards offer end-to-end transaction tracing and charge visibility, which revolutionize the dependability of payment transactions across international transactions. Implementations of production show measurable operational results such as decreased processing times, higher throughput capacity, decreased error rate, improved system availability, and great savings in terms of cost through automation and optimization of infrastructure. Nonetheless, investment banking has special aspects of implementation that include multi-jurisdictional regulatory compliance, sophisticated market infrastructure integration, ultra-performance requirements ranging from sub-milliseconds of latency to large-volume throughput, and high-operational-risk management needs. The change is not only in the technical and operational aspects but also social aspects, such as improvements in systemic financial stability through narrowing the settlement windows, transformation in the workforce as automation does away with routine jobs and introduces new, highly technical jobs, regulatory innovation to facilitate proactive compliance, and environmental sustainability through the improvement of computational efficiency. The path to cloud-native architecture seems to be one-way rather than two-way because the benefits of this approach are overwhelming, but achieving such benefits and minimizing risks requires active decisions that incorporate ethical considerations, multi-stakeholder, and the social responsibility of technology to the development process to guarantee its benefit to the wider society.