October 10, 2013

Recently much of the press Microsoft has received has focused on the new version of its Surface tablets. While that is important, and it could have implications for financial services firms in the near future, the company has been busy in other business units as well.

Specifically, the financial services group at Microsoft has been busy increasing the provider's footprint in the capital markets space, according to Karen Cone, general manager for financial services at Microsoft. "We are having real business conversations with the capital markets firms and banks," Cone says, adding that Direct Edge and the Singapore Exchange both chose Windows over Linux. "A lot of things are on the platform. People now say, 'Okay, let's talk'" about what Microsoft can do in the capital markets space. "We have enterprise ready technology and we can talk about real business solutions."

Although Microsoft has both devices (Surface) and services, much of the discussions for the financial services group has focused on enterprise-specific capabilities, such as Mircosoft's Azure cloud offering. "We want to be a devices and services company," Cone says. "We have the devices and the business intelligence." Out strategy "is fed by knowing who your customers are. Because there is so much cost pressure, we have been working on the cloud and getting people to move the cloud." Part of the focus on the cloud has been to address regulatory and security concerns for financial services customers, Cone adds.

Recently, Microsoft announced major enhancements to Azure, specifically aimed at enterprise users. For instance, firms can use the familiar Windows Server and System Center to access Azure, rather than require another interface for cloud management.

[For more on what the new release of Microsoft Azure means to financial firms, read: Microsoft's Azure Cloud Move: What It Means.]

Still, one of the largest concerns for capital markets firms involves moving client data to the cloud. "We are sorting out the issue of customer data, and most [customer data] tends to remain on premises," Cone says. For instance, many of the services and processing is done in the cloud, while the customer data remains on site at the financial company, Cone explains. "You can send the compute to the cloud and you can encrypt the data, but still keep the client data in house."

Azure Gains Steam

According to industry observers and even some of Microsoft's direct cloud competitors, Azure has gained major market share in 2013, especially with enterprise clients.

"What we have done with the Azure platform, is allow simulation and modeling to move to the cloud," says Rupesh Khendry, head of worldwide capital markets industry solutions within the financial services industry organization at Microsoft. "To do it on premises, you have to have a massive amount of servers. We have been able to provide large modeling capabilities that would normally take days or months to provision in house, in 15 minutes or less."

"In the capital markets, the focus is cost pressure and balancing it with innovation," Khendry says. "That is what we are hearing [from our clients]. We are looking to help them rationalize cost."

Windows 8 In Financial Services

With firms still focusing on cost reduction, Windows 8 has received a lukewarm reception on the enterprise level. For starters, most desktops and laptops in financial institutions do not have touch screen capabilities, rendering some of the more advanced features of Windows 8 inoperable. The OS also has a new look and feel that does require some training, much like any new OS that has dramatic changes.

However, as the usage of tablets continues to grow and, perhaps, more laptops and desktops start to ship with touch screen capabilities, Windows 8 may give Microsoft and advantage with enterprise users, according to Cone, especially since most enterprise users deploy Windows devices. "A lot of what we are trying to do is work across multiple devices and channels," Cone says. "Today there are so many different things -- mobile devices, tablets and desktops." Windows 8 can provide the same integration and user experience across channels, Cone adds.

"This is where Microsoft has an advantage," Cone says. With Microsoft, "You can link from phone to desktop to back office. We believe the Windows experience is superior."

ABOUT THE AUTHOR
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology.