Our recent webinar on July 11th introduced attendees to how machine learning (ML) and artificial intelligence (AI) are changing the nature of financial technology, known these days as fintech. Our speakers, Terry Roche of Tabb Group and Keith McAuliffe of Solace dove into the impact these technologies are having on modern capital markets.
Together, Terry and Keith explained how AI has evolved from a backroom experiment to being a key part of significant “run the bank” programs like trade surveillance and sentiment analysis. Today the focus is on cost savings and compliance, but things are clearly moving towards revenue generation.
One of the drivers of this new world of AI and ML in finance is the massive onslaught of data, both in volume and variety of both sources and consumers. Clearly, the future of finance is being driven by the need to expand data reach and ability to accept data in ever changing ways.… Read the rest
What better way to kick off 2017 than by analyzing some upcoming banking regulations, right? OK, that might not sound like your idea of a good time, but there’s at least one worth talking about. It’s so huge, so impactful and so fundamental to the financial services industry that it presents a unique opportunity to reconsider technology design in a way that unifies back- and front-office functions across.
Fundamental Review of the Trading Book, or FRTB, is due to hit in 2019 and its scope is so broad that many in the business jokingly refer to it as “Basel IV.” Not only that, but FRTB’s requirements are so explicit they will definitely influence technology strategy – which presents a unique opportunity because most banks are actively looking for ways to cut cost and complexity with clouds and virtualization.
Among other things, FRTB will require banks to report their actual risk relative to their stated risk appetite, which will hopefully eliminate the need for the kind of bailouts it took to square things away in 2008.… Read the rest
The previous blog post in this series explained how many capital markets firms have ended up with a multitude of messaging technologies to handle different data movement requirements, the problems associated with that, and how Solace technology helps simplify such environments. This post drills in to how big data is leading companies in other industries down this same path.
According to Gartner, as of June 2014, 73 percent of organizations have or will be investing in big data in the next two years. While big data is intended to support both structured and unstructured data, many organizations start by analyzing their structured transactional data because it’s easier for them to understand, and can be more readily applied to optimizing operational efficiency.
During this phase, enterprises focus on how the big data technology will extract value from their data. They load all kinds of information into their big data lake using whatever tools are at hand or easiest to add to the mix.… Read the rest
If you work in capital markets, you know that most buy side and sell side firms operate lots of different messaging products across their business. It’s not unusual for a firm to have six to ten different messaging technologies in their production environment, from different vendors, as a legacy of M&A and developed internally. As a rational technologist, I can hear your internal line of questioning: How does this happen? What drives this type of fragmentation? Is it as bad as it sounds? And you’re probably thinking this could never happen to you.
But if you’re implementing big data or cloud, it probably already is. I will explain why, but first – how did capital markets get to this point and what are they doing about it?
Not so long ago, financial trading was done by customers talking to their brokers who talked to traders who placed an order to make a trade.… Read the rest
Yesterday, I participated in TEDx New Wall Street in Mountain View, California. In the spirit of all TED events, this was a day of sharing ideas — specifically about re-imagining financial services. TEDx events operate under license of TED in support of locally organized events that hold to their TED-like vision. This event was curated by Bruce Cahan, an impressive guy with a background in academia who is (surprise) starting a new kind of online bank called GoodBank.
There was an odd undercurrent of Silicon Valley chest thumping with respect to idea generation and lordship over all things technology that seemed out of place, especially since so many of the speakers were from other places. Regardless, here is a summary of the topics presented grouped by major themes.
- The banking world finds a huge percentage of the world (and a surprising number of Americans) so unattractive as customers that they offer virtually no relevant products and leave them to the world of predatory “payday loan” companies.
The press headlines are (mostly) celebrating passage of the financial reform act. I even got a bulk email from the president saying it was a great day for the little guy and a bad day to be a banking special interest guy. Then he asked me for 5 bucks and encouraged me to send the note on to 6 other people in my town. Wait, did the president just send me a chain letter?
But the reality is that financial reform is not at the finish line; the practical side of reform hasn’t even glimpsed the starting line. Financial reform is an agreement that more regulation and consumer protections need to be in place, but does little to define what those regulations or protections might be. There are some broad stroke intents related to making derivatives trading more transparent and changes in capital requirements that are fairly straight forward. But what information regulators will require from banks or specifics on how risk management will change are not yet understood.… Read the rest
For the last few decades, from the early days of Gordon Gekko and Liar’s Poker to today’s focus on hedge funds and high frequency trading, the sex appeal has clearly centered around the front office. The press loves to write about it and we love to read about it. Every trade is like the proverbial iceberg, though — the trading decision is what everyone sees, but the majority of work happens in the murky waters below the surface where the considerably less sexy mid-and-back-office operations occur.
Last week Greg MacSweeney wrote a good article in Wall Street and Technology highlighting the back office as a new battleground for efficiency. After years of chasing zero latency for the front-office, the back office is comparatively archaic and badly in need of updating.
Greg predicts that 2010 will be the year the back office gets some love, and his analysis is spot on.… Read the rest