With rapid changes in the financial industry, firms are challenged to keep their technology robust and resilient while at the same time being secure and compliant, says Steve Grob, director of group strategy for Fidessa, a London-based ISV that serves both the buy side and sell side.
He spoke with John Lothian News at the FIA Boca conference about this technology balance as well as what companies like Fidessa are doing to address IT costs.
“One of the things we’ve found with our customers is that owning the whole technology stack, building it themselves, is hugely duplicative for really very little return,” Grob said. “So what we’re doing for our customers is to do all that heavy lifting in terms of exchange connectivity, risk, and particularly the work flow around order management, and then allowing them to put in their own special sauce in terms of their own algos or whatever it is that makes them different.”
That results in reduced costs for customers, he said.
Cost cutting is driving a lot of the changes in technology, and the next industry trend may be that more technology gets put into utilities to save costs; firms would share the cost of the infrastructure rather than having a competitive edge in areas such as post-trade, Grob said, where there’s really no advantage in doing something one way rather than another.
He also said the financial industry can learn a lot from technology that comes from outside the financial world. Grob mentioned an event in Fort Lauderdale in March, where buy side firms paired new tech firms with established vendors like Fidessa to see what ideas might come out of it.
“They added in a guy from the CIA talking about cybersecurity, and the guy who runs the Pittsburgh Pirates talking about the analytics they use in terms of looking at players,” Grob said. “It was a great way to think about our industry and what’s needed, because a lot of the cool technology won’t see the light of day in our industry because it won’t meet vendor risk requirements or compliance.”
He said finding a way to get the best of both worlds is the trick.
“Looking outside is a great source of inspiration,” he said, “Trying to look outside the narrow field that we work in and take the jargon out and focus on what’s the real information problem you’re trying to solve, and finding out how different people have solved those problems, is a great source of ideas.”
We are approaching an inflection point in the industry, Grob added, because the economics have fundamentally changed. Even as the global economy recovers, the continuing low interest rate environment means firms must look at different ways of managing their work flow.