Morgan Stanley is partnering with a tech giant to help with the bank's digital transformation and adoption of the public cloud.
The bank announced a strategic cloud partnership with Microsoft on Wednesday. It involves the two sides working together as Morgan Stanley looks to overhaul its tech and move away from using physical databases.
Rob Rooney, Morgan Stanley's head of tech, operations, and firm resilience, told Insider that the bank feels ready to make a significant push into the cloud after years of foundational work with the tech.
"What we are really trying to get is a level of innovation and flexibility that we can't get on-prem," he said, referring to software that runs on physical databases as opposed to on remote servers.
"Our on-prem environment, frankly, is world-class, incredibly efficient, and works exceptionally well, but we can't scale it the way we can in the cloud," he added.
Bobby Gilja will serve as the point person at Morgan Stanley for the partnership, working with Scott Guthrie, executive vice president of cloud and AI at Microsoft, and his team. Gilja is a 34-year veteran of Morgan Stanley who in February was named head of cloud and architecture, a newly created role focused on driving the bank's cloud strategy, enablement, and adoption, Insider reported at the time.
Rooney cited sharing data in the cloud with customers as a key focus of the bank and a motivating factor behind making the push into the tech. The ability to distill huge amounts of information into concise advice for customers big and small is the "holy grail," he added.
"We have a lot of data that could be useful to a lot of our clients, but finding the right super-efficient and safe way to share that with our clients I think is a really important part of our future," he said. "Doing that in the cloud is really the only way to go."
Microsoft was willing to prioritize key features for Morgan Stanley
Rooney acknowledged that the bank isn't an early adopter of the cloud, but said Morgan Stanley has been deliberate in its approach.
Some of the hesitancy came from cloud providers not being ready to work with a large, complicated, highly regulated firm, he added.
That, in part, led to Morgan Stanley's decision to partner with Microsoft. Rooney said the cloud provider was willing to prioritize certain areas the bank felt the public cloud was still lacking.
Microsoft's commitment to continue to work on app-level encryption, a standard level of security on all new features released, and open-source capabilities were three areas Rooney highlighted as being key to the bank's decision to team up with Microsoft.
Morgan Stanley will maintain a multi-cloud approach, working with other cloud providers such as Amazon Web Services, Google Cloud Platform, and IBM, Rooney said. However, Microsoft Azure, the tech giant's cloud offering, will serve as its lead partner.
"Some of the things that are really important to us, we feel confident that their commitment to accelerate those to our timeline is something that is really advantageous," Rooney said.
"And by the way, it will be advantageous to Azure, because we don't think what we're looking for is something that everybody doesn't need," he added.
Wall Street is partnering up with providers as it heads to the cloud
As Wall Street has looked to be more aggressive with its adoption of cloud tech, some have partnered with the biggest providers in the space.
In December 2020, Deutsche Bank signed a multi-year partnership with Google Cloud to work on the bank's digital transformation and collaborate on offerings and solutions geared toward financial services.
Bank of America announced in 2019 it was working with IBM on the development of its hybrid-cloud offering that catered specifically to Wall Street. In April 2021 the tech giant's financial services-focused cloud offering had a wide release.
AWS has also worked with its fair share of financial firms, including JPMorgan and $51.5 billion hedge fund Millennium Management.
Morgan Stanley has also worked with AWS. In May, Vikas Chawla, an executive director on Morgan Stanley's enterprise technology and services team, detailed how the bank uses the tech to analyze 3 billion data points each day to measure equity risk.
Partnerships between cloud providers and banks is just the latest iteration of what has been a constant in the industry, Rooney said.
"We have world-class technologists at Morgan Stanley, but we're a global investment bank, wealth manager, and asset manager," he added. "So to partner with world-class technology organizations that live and breathe this stuff is something we've been doing forever."