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Technology - Accelerating Improvement in the Financial Market

By Bhupesh Vora, MD, Europe Head of CM Technology, RBC Capital Markets

Bhupesh Vora, MD, Europe Head of CM Technology, RBC Capital Markets

2019 continued to be a challenging market environment for H1 across the street. Firms will be doubling down on the strategies and efforts that already began in 2018 and so far, for the first half of the year we are certainly seeing that. Cost continues to be a focus in the industry, prompting firms to be prudent in making internal investments and cutting down things that are not considered to be core to their forward-looking strategies.

Technology as a differentiator and automation to achieve efficiency remains the key goal for many and there will be continued significant investments in components and technologies to help finance firms accelerate development and produce customer value quickly. The adoption of infrastructure toolsets around DevOps in general and particularly around containerization such as Docker on the server will continue at a rapid pace. As firms continue to push agile to deliver “Quicker, Faster, and Better”, spend on development tools to help accelerate this journey and convert legacy practices will be the key. As part of that journey, there will be a wider migration to cloud both internal and external to provide speed of scale up and down, better make use of hardware, and the estate that needs to be managed and protected.

Cross application communication on User Interface (UI) will start to pick up pace, after the foundations have been laid down on cross industry initiatives like FDC3. This will allow for a richer experience and an easier way for sales and trading to leverage innovations from FinTech’s without investing in full scale integration while making use of tools and applications cohesively. Similarly, wider open source initiatives within banking are starting to gather pace including various FinOS initiatives to allow better collaboration across banking technology and democratize those technologies that have important foundational benefits but are not seen as a differentiating competitive advantage.

"Given the rate of investment in the Fintech space, financial firms will be focused on creating the right environment for technology staff as well as partnerships with Fintech’s to have the best of both worlds"

The investments in Data and Analytics will continue, and analysis, rather than just capture of information will be the focus area. In memory computing, tools for accelerating analysis will become more popular and allow faster training of Machine Learning (ML) models as well as AI algorithms to operate at a wider scale and for more use cases. Different algorithms and ML toolkits which allow integration on top of firm’s data lakes and in-memory compute fabrics with a faster time to market will also become popular, continuing investments that have already been made in 2018. Seamlessly integrating these tools into the end client experience both internally and externally and being able to use large but high quality data sets will be a differentiating factor and competitive advantage. Where the market is still working on maturing in terms of return on such investment from the wider data analysis, we are starting to see some banks differentiate around execution leveraging AI for algorithms trading vs traditional/ML based algorithms in this area, realizing forward-looking investments they have made in the space.

Finally, the resource environment will continue to be as difficult in finding and retaining technology talent in 2019 as it was in 2018. Given the rate of investment in the Fintech space, financial firms will be focused on creating the right environment for technology staff as well as partnerships with Fintech’s to have the best of both worlds. Financial firms that can harness and evolve the skills of their technologically staff aligned with a partnership with their sales and trading businesses and creating that inclusive culture will start to reap the dividends of the significant investments that are being made, in the same way that Fintech’s have been able to get products to markets and innovate so quickly.

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