Today’s financial firms rely heavily on data and technology in all aspects of their business. And in areas such as derivatives pricing, risk analytics, quantitative modelling, portfolio optimisation and bank stress-testing, the use of high performance computing (HPC) to rapidly perform highly complex calculations on large data sets is becoming increasingly prevalent, writes Stef Weegels.
HPC is now being applied to an ever-wider range of uses. In recent years one of the most important has been around regulatory compliance. Banks are now required to have strong quantitative modelling programs that demonstrate to regulators that they can endure economic shocks with sufficient capital on hand.
Risk modelling – whether for regulators or for internal use – is clearly a necessity for banks, and clever use of HPC can bring about a great deal more accuracy in this regard. However, HPC can also help firms with core revenue generation, by crunching and analysing the alternative big data sets that are increasingly fundamental to developing and capitalising on alpha-generating trade strategies. And for managers of hedge funds and other assets, the shift from traditional active to passive and smart beta-driven investment strategies means that quantitative alpha is an increasingly important differentiator.
Effectively deploying such advanced computing resources can be a challenge for any firm, particularly with the growing use of artificial intelligence and machine learning techniques, which only add to the heavy compute workload.
Firms that try to build an effective HPC technology platform to address all of this on their own face tremendous challenges, particularly around the cost and complexity of continually updating hardware and operating software. Also, as HPC is power hungry and in-house HPC servers can be inefficient due to the need to cool them appropriately, hosting within a high-power cost environment such as UK can be prohibitively expensive. Another issue is the requirement for additional personnel to maintain the backend HPC infrastructure, where qualified talent is in short supply. Even for banks that do have some in-house HPC resource available, the need to rapidly scale to cope with surplus compute demand often results in severe bottlenecks that can badly impact business outcomes.
Therefore forward-thinking firms are now looking at the next frontier in high performance computing, HPC-as-a-Service (HPCaaS), an approach that is starting to resonate strongly in the banking and finance sector.
To meet this growing demand, Verne Global, as a leader in high performance computing, has launched hpcDIRECT, a powerful, agile and efficient HPCaaS platform, purpose built from the outset by HPC specialists for HPC applications to address the intense compute requirements of today’s data-driven industries such as financial services.
There are many benefits that hpcDIRECT offers. First, it provides the ability to scale compute resources to meet intensive application demands. This not only removes bottlenecks but can also reduce time to market by shortening the deployment time for new projects. Also, it satisfies the demands of banks to move from a CapEx to an OpEx model for their HPC technology. And as there is no need for hardware procurement, implementation, customisation, management or maintenance, or for dedicated IT Staff or contractors, overheads are much lower and lengthy procurement schedules and processes can be avoided.
hpcDIRECT also offers hybrid hosting, which gives banks and other financial institutions the ability to optimise their HPCaaS infrastructure across both colocation and bare metal-as-a-service, with cloud connect solutions to the public cloud for those applications or workloads that require it. And with all of this provided from Verne’s Icelandic data-centre campus, firms benefit from the country’s abundant, low-cost power and free cooling, which are core considerations in any HPC environment.
For banks and other financial institutions looking to successfully deploy HPCaaS, finding a technology partner with the appropriate background, expertise and high capacity infrastructure on demand is critical.
Based in London, Stef Weegels is Verne Global's director of sales and heads up the company's work within financial services and capital markets. You can follow him at: @StefWeegels