The Competitive Advantage of HPC
In an era of financial convergence, faster processing speed (HPC) is the mainstay of faster analytics and quick decisions. Growing regulatory demands also call for speedier insights in trading, risk management, and customer care. Greater operational agility to respond faster to market changes is often the game-changer in Fintech and Regtech, saving billions and ensuring timely regulatory compliance.
Financial institutions and trading platforms are thus adopting state-of-the-art technologies with High Performance Computing at its core.
Why High Performance Computing (HPC)?
The voluminous data generated puts an enormous strain on computing resources due to the volume, velocity, and complexity of calculations and data. Traditional computing environment is unable to process the same in a timely or agile manner.
However, the high-end computing and analytics in HPC works in a Big Data ecosystem for deeper and faster analytics, the ultimate building blocks in the financial marketplace.
The HPC edge in Fintech
High Performance Computing unlocks the hidden potential of Big Data, by leveraging customised computing infrastructure at incredibly high speeds. It uses supercomputers and private HPC clusters, grids and clouds with high-density data centres, for more computational power. Larger and larger models can be computed in a scaled speedup for multiple applications in a single millisecond.
The analytics is embedded in the database itself – in the memory of the data or multiple processors in the HPC grid. This drives high-end faster analytics in real-time, by doing away with the ‘sampling’ time. Humungous volumes of data are processed more economically and quickly with high-speed data transfer, and storage that expands to exabytes.
High-frequency algorithmic trading is characterised by high speeds, with fractions of milliseconds as the time-advantage. Thus HPC has moved from an optional upgrade to becoming a necessity as it helps provide speed, scalability and agility. Investment banks use high-frequency trading applications to execute trades milliseconds before their competitors, translating into millions in additional returns. The derivatives market too is using HPC for faster assessment of risk factors.
In financial services, high performance computing capabilities are a matter of competitive advantage. Several factors have led-up to the increased use of HPC in financial services.
First, with preferred mode of transactions and communications shifting to social media and mobile, banks are now challenged to capture, maintain, and analyze data from multi-channel disparate sources. On the other hand, customers demand ever-shorter turnaround times requiring greater speed in operations, possible with HPC.
Second, from complex calculations to faster analytics, generating and processing huge amounts of data are an increasing challenge. High performance computing helps faster verification of transactions, and instant detection of anomalous patterns and fraud. Third, volatile market conditions and regulatory pressures have pushed the need for faster real-time risk analysis, faster delivery mechanisms and smarter decisions.
Fourth, HPC solutions enable efficiencies in the computing of complex and heavy algorithms that represent risk parameters. One of the reasons that contributed to the credit crisis of 2007-2008 was the miscalculation of risks of underlying assets of financial instruments, as the models under-performed in traditional computing.
Credit rating agencies, regulators and investors are placing demands on sophisticated risk analysis and financial models. Actuarial high-performance computing and modelling have thus become indispensable. The greater processing power of HPC allows more accurate and more frequent risk calculations, with timely analysis. Another driver is the growing complexity of the models and products. So companies want to run ever-more complex ‘what-if’ calculations, aggregate multiple model outputs on-the-go, while integrating with a wider architecture at great speeds.
HPC-supported fast connectivity, data access, and computation performance together with robust solutions for compliance archiving are helping the financial services industry face the myriad challenges of market, technology and regulations.