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THE LAST HURDLE FOR CLOUD-BASED SOFTWARE?

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It is no secret that the costs of cloud-based software applications have reduced considerably over recent years. Furthermore, developments in cloud service provider security are starting to allay the concerns of investment technology heads and regulators to the extent that cloud solutions now present a powerful message that in these harsh economic times can no longer be ignored writes Mick Brant, CEO of Teknometry.

cloud based software

cloud based software

Despite major advances in recent years, fears over cloud-based performance measurement and other applications persist. Even some Heads of Technology at major institutions quake at the mere mention of the ‘c-word’. How much of this fear is generated by a lack of understanding, ‘empire protection’ or genuine concerns is difficult to estimate. Yet the impact of moving applications to the cloud on the total cost of ownership is immense, in terms of the reduction in licence fees, hardware costs and operating costs such as administration, back up and other housekeeping functions.

Cutting costs and gaining operational efficiencies
For example, a recent CEB TowerGroup report cited increasing worries around meeting performance and returns objectives. Asset managers face intensifying pressures on pricing, shifting investor preferences, regulatory burdens and an increasingly sophisticated fund landscape. Byshifting their technology deployments to the cloud, CEB TowerGroup believes that firms will cut costs and gain operational efficiencies. It also believes that the industry will increasingly favour an integrated analytics platform over discrete applications for performance, attribution, risk, and investment decision support.

For example, today’s cloud-based performance applications provide sophisticated query and visualisation tools to monitor and analyse performance, attribution and risk on an integrated platform. Additionally, in a multi-tenanted format, cloud-based analytics solutions offer rapid deployment and subsequent upgrades while maintaining customer isolation. These solutions are often also able to utilise existing data sources and workflows with very little procedural change, to facilitate migration measured in weeks, rather than months.

Sharing of resources
Furthermore, cloud-based software can allow resources to be shared across the platform by employing resource-scheduling technology that scales dynamically as clients sign on to their own secure realm.  This can facilitate a ‘Pay As You Grow’ pricing model based on volumes and the services used, rather than a traditional software licence model, making the service attractive to a broader range of investment organisations.

The key is a secure and flexible cloud platform that offers resource allocation services that the service provider can leverage in the application architecture to allow the dynamic allocation of processing and storage resources based on the number of active users and tasks. A good example is Microsoft’s Azure cloud service, which also offers software providers other benefits such as in-built geo-replication of data and switching in the event of failure. This type of capability has attracted a great number of niche software providers to the investment management industry for good reason: the technology costs are minimal compared to on-site installations.

Security remains a question mark
Security, whether in the cloud or on-site, is always a concern for investment management firms.  Contractual and regulatory obligations place a duty of care in relation to client data and security, control, access and auditability have been considered much easier to manage in an on-site installation.  Cloud service providers have responded by improving security, and engaging with the regulators to better understand and address these issues.

For example, Azure‘s geographically dispersed data centres comply with key industry-standard procedures for security and resilience, which are independently audited.  In addition, many cloud-based applications have an additional layer of security and the providers will regularly have their own vulnerability tests carried out.

Private cloud, where companies offer remote services to their clients via their own data centres, is commonplace in large financial institutions. The rationale is that you get all the scalability and metering benefits of a public cloud service without ceding control and security to a service provider.

However, this can be a costly solution as it is unlikely to attract the economies of scale that the global cloud providers can offer or the cost saving from dynamic resource allocation. There are also no guarantees that a private cloud installation will be any more secure, as high profile security breaches at companies such as Sony have highlighted.

Conclusion
More and more investment management firms are looking at cloud technology to achieve scale, cut costs and improve time to market. While many industry professionals would agree that cloud computing is gaining traction in investment management firms, there is still much debate as to whether it will ever be wholeheartedly embraced. Yet if security is the final hurdle and investment management margins remain under pressure, few would argue with the fact that cloud technology now presents a compelling proposition for investment firms, leaving no doubt that cloud-based applications are here to stay.

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‘Spooky’ AI tool brings dead relatives’ photos to life

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'Spooky' AI tool brings dead relatives' photos to life 1

By Umberto Bacchi

(Thomson Reuters Foundation) – Like the animated paintings that adorn the walls of Harry Potter’s school, a new online tool promises to bring portraits of dead relatives to life, stirring debate about the use of technology to impersonate people.

Genealogy company MyHeritage launched its “Deep Nostalgia” feature earlier this week, allowing users to turn stills into short videos showing the person in the photograph smiling, winking and nodding.

“Seeing our beloved ancestors’ faces come to life … lets us imagine how they might have been in reality, and provides a profound new way of connecting to our family history,” MyHeritage founder Gilad Japhet said in a statement.

Developed with Israeli computer vision firm D-ID, Deep Nostalgia uses deep learning algorithms to animate images with facial expressions that were based on those of MyHeritage employees.

Some of the company’s users took to Twitter on Friday to share the animated images of their deceased relatives, as well as moving depictions of historical figures, including Albert Einstein and Ancient Egypt’s lost Queen Nefertiti.

“Takes my breath away. This is my grandfather who died when I was eight. @MyHeritage brought him back to life. Absolutely crazy,” wrote Twitter user Jenny Hawran.

While most expressed amazement, others described the feature as “spooky” and said it raised ethical questions. “The photos are enough. The dead have no say in this,” tweeted user Erica Cervini.

From chatbots to virtual reality, the tool is the latest innovation seeking to bring the dead to life through technology.

Last year U.S. rapper Kanye West famously gifted his wife Kim Kardashian a hologram of her late father congratulating her on her birthday and on marrying “the most, most, most, most, most genius man in the whole world”.

‘ANIMATING THE PAST’

The trend has opened up all sorts of ethical and legal questions, particularly around consent and the opportunity to blur reality by recreating a virtual doppelganger of the living.

Elaine Kasket a psychology professor at the University of Wolverhampton in Britain who authored a book on the “digital afterlife”, said that while Deep Nostalgia was not necessarily “problematic”, it sat “at the top of a slippery slope”.

“When people start overwriting history or sort of animating the past … You wonder where that ends up,” she said.

MyHeritage acknowledges on its website that the technology can be “a bit uncanny” and its use “controversial”, but said steps have been taken to prevent abuses.

“The Deep Nostalgia feature includes hard-coded animations that are intentionally without any speech and therefore cannot be used to fake any content or deliver any message,” MyHeritage public relations director Rafi Mendelsohn said in a statement.

Yet, images alone can convey meaning, said Faheem Hussain, a clinical assistant professor at Arizona State University’s School for the Future of Innovation in Society.

“Imagine somebody took a picture of the Last Supper and Judas is now winking at Mary Magdalene – what kind of implications that can have,” Hussain told the Thomson Reuters Foundation by phone.

Similarly, Artificial Intelligence (AI) animations could be use to make someone appear as though they were doing things they might not be happy about, such as rolling their eyes or smiling at a funeral, he added.

Mendelsohn of MyHeritage said using photos of a living person without their consent was a breach of the company’s terms and conditions, adding that videos were clearly marked with AI symbols to differentiate them from authentic recordings.

“It is our ethical responsibility to mark such synthetic videos clearly and differentiate them from real videos,” he said.

(Reporting by Umberto Bacchi @UmbertoBacchi in Milan; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

 

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Does your institution have operational resilience? Testing cyber resilience may be a good way to find out

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REMOTE WORKING STRATEGY REQUIRED TO STRENGTHEN CYBER RESILIENCE

By Callum Roxan, Head of Threat Intelligence, F-Secure

If ever 2020 had a lesson, it was that no organization can possibly prepare for every conceivable outcome. Yet building one particular skill will make any crisis easier to handle: operational resilience.

Many financial institutions have already devoted resources to building operational resilience. Unfortunately, this often takes what Miles Celic, Chief Executive Officer of TheCityUK, calls a “near death” experience for this conversion to occur. “Recent years have seen a number of cases of loss of reputation, reduced enterprise value and senior executive casualties from operational incidents that have been badly handled,” he wrote.

But it need not take a disaster to learn this vital lesson.

“Operational resilience means not only planning around specific, identified risks,” Charlotte Gerken, the executive director of the Bank of England, said in a 2017 speech on operational resilience. “We want firms to plan on the assumption that any part of their infrastructure could be impacted, whatever the reason.” Gerken noted that firms that had successfully achieved a level of resilience that survives a crisis had established the necessary mechanisms to bring the business together to respond where and when risks materialised, no matter why or how.

We’ll talk about the bit we know best here; by testing for cyber resilience, a company can do more than prepare for the worst sort of attacks it may face. This process can help any business get a clearer view of how it operates, and how well it is prepared for all kinds of surprises.

Assumptions and the mechanisms they should produce are the best way to prepare for the unknown. But, as the boxer Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” The aim of cyber resilience is to build an effective security posture that survives that first punch, and the several that are likely to follow. So how can an institution be confident that they’ve achieved genuine operational resilience?

This requires an organization to honestly assess itself through the motto inscribed at the front of the Temple of Delphi: “Know thyself.” And when it comes to cyber security, there is a way for an organization to test just how thoroughly it comprehends its own strengths and weaknesses.

Callum Roxan

Callum Roxan

The Bank of England was the first central bank to help develop the framework for institutions to test the integrity of their systems. CBEST is made up of controlled, bespoke, intelligence-led cyber security tests that replicate behaviours of those threat actors, and often have unforeseen or secondary benefits. Gerken notes that the “firms that did best in the testing tended to be those that really understood their organisations. They understood their own needs, strengths and weaknesses, and reflected this in the way they built resilience.”

In short, testing cyber resilience can provide clear insight into an institution’s operational resilience in general.

Gaining that specific knowledge without a “near-death” experience is obviously a significant win for any establishment. And testing for operational resilience throughout the industry can provide some reminders of the steps every organization should take so that testing provides unique insists about their institution, and not just a checklist of cyber defence basics.

The IIF/McKinsey Cyber Resilience Survey of the financial services industry released in March lasy year provided six sets of immediate actions that institutions could take to improve their cyber security posture. The toplines of these recommendations were:

  1. Do the basics, patch your vulnerabilities.
  2. Review your cloud architecture and security capabilities.
  3. Reduce your supply chain risk.
  4. Practice your incident response and recovery capabilities.
  5. Set aside a specific cyber security budget and prioritise it
  6. Build a skilled talent pool and optimize resources through automation.

But let’s be honest: If simply reading a solid list of recommendations created cyber resilience, cyber criminals would be out of business. Unfortunately, cyber crime as a business is booming and threat actors targeting essential financial institutions through cyber attacks are likely earning billions in the trillion dollar industry of financial crime.A list can’t reveal an institution’s unique weaknesses, those security failings and chokepoints that could shudder operations, not just during a successful cyber attack but during various other crises that challenge their operations. And the failings that lead to flaws in an institution’s cyber defence likely reverberate throughout the organization as liabilities that other crises would likely expose.

The best way to get a sense of operational resilience will always be to simulate the worst that attackers can summon. That’s why the time to test yourself is now, before someone else does.

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Thomson Reuters to stress AI, machine learning in a post-pandemic world

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By Kenneth Li and Nick Zieminski

NEW YORK (Reuters) – Thomson Reuters Corp will streamline technology, close offices and rely more on machines to prepare for a post-pandemic world, the news and information group said on Tuesday, as it reported higher sales and operating profit.

The Toronto-headquartered company will spend $500 million to $600 million over two years to burnish its technology credentials, investing in AI and machine learning to get data faster to professional customers increasingly working from home during the coronavirus crisis.

It will transition from a content provider to a content-driven technology company, and from a holding company to an operational structure.

Thomson Reuters’ New York- and Toronto-listed shares each gained more than 8%.

It aims to cut annual operating expenses by $600 million through eliminating duplicate functions, modernizing and consolidating technology, as well as through attrition and shrinking its real estate footprint. Layoffs are not a focus of the cost cuts and there are no current plans to divest assets as part of this plan, the company said.

“We look at the changing behaviors as a result of COVID … on professionals working from home working remotely being much more reliant on 24-7, digital always-on, sort of real-time always available information, served through software and powered by AI and ML (machine learning),” Chief Executive Steve Hasker said in an interview.

Sales growth is forecast to accelerate in each of the next three years compared with 1.3% reported sales growth for 2020, the company said in its earnings release.

Thomson Reuters, which owns Reuters News, said revenues rose 2% to $1.62 billion, while its operating profit jumped more than 300% to $956 million, reflecting the sale of an investment and other items.

Its three main divisions, Legal Professionals, Tax & Accounting Professionals, and Corporates, all showed higher organic quarterly sales and adjusted profit. As part of the two-year change program, the corporate, legal and tax side will operate more as one customer-facing entity.

Adjusted earnings per share of 54 cents were ahead of the 46 cents expected, based on data from Refinitiv.

The company raised its annual dividend by 10 cents to $1.62 per share.

The Reuters News business showed lower revenue in the fourth quarter. In January, Stephen J. Adler, Reuters’ editor-in-chief for the past decade, said he would retire in April from the world’s largest international news provider.

Thomson Reuters also said its stake in The London Stock Exchange is now worth about $11.2 billion.

The LSE last month completed its $27-billion takeover of data and analytics business Refinitiv, 45%-owned by Thomson Reuters.

(Reporting by Ken Li, writing by Nick Zieminski in New York, editing by Louise Heavens and Jane Merriman)

 

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