Will T+2 Make the Most Progress in 2015?

By Eugene Grygo

FTF News gathered forecasts from three vendors to get their Ops predictions for 2015. The magazine spoke with key industry insiders, including Alexei Miller, Managing Partner at DataArt.

DataArt: Mid-Size Firms to Shine in 2015

Alexei Miller, managing director at DataArt, offers FTF News his securities operations predictions for 2015. DataArt is a custom software development vendor that serves financial services firms and other industries. Its offerings for financial services firms encompass middle- and back-office systems, risk management, Form PF and AIFMD. Vendor officials say they offer “domain knowledge with offshore cost advantages and resource flexibility.” DataArt has software engineers in New York, London, Switzerland, Eastern Europe and Argentina.

(Not) reinventing the wheel, a.k.a. the Age of Consortia:

Financial firms now realize that many functions that have traditionally been built in-house (often several times for different divisions) offer little competitive advantage but carry huge price tags.

Large banks have on occasion been pooling together to address these issues in the past. In 2015, we expect to see this consortium-building occur a lot more, and the trend will spill over to other sectors of the markets including buy-side firms.

The range of functions will also widen dramatically, from reference data to research distribution to trade execution, due diligence and compliance. As a side show, mid-to-large firms will ramp up efforts to spin off proprietary IT to standalone businesses, both as an attempt to recoup their investment and provide career options for staff. Expect to see many more asset management back-office platform products that look awfully similar.

The squeeze in the middle will lead to more – and better – financial IT outsourcing:

As IBM argues, in today’s environment both large banks and niche specialized players tend to do well, with the former benefiting from sheer scale and the latter from aggressive pursuit of the market’s most desirable customers.

This trend is positioned to also extend to the buy-side, and mid-size asset management firms will have to out-innovate the small guys while pushing their operations to their limit in order to survive. Firms, increasingly unable to keep all of their IT in-house for cost and time-to-market concerns, will lead the next wave of “smart outsourcing” by working with select providers that can drive business outcomes, invest heavily, and share in success by taking ownership and commercializing technology across clients.

Small shops can’t afford this approach and larger firms struggle to look beyond old school staff augmentation models, so this is really the chance for mid-size firms to shine – or be squeezed.

The war for talent will get brutal and funny:

In the last three years, as the extreme heat generated by Silicon Valley warmed Silicon Alley, young geeks have begun slowly turning away from Wall Street careers toward flip-flops and the stock-options-laden consumer Internet economy.

We have now crossed the tipping point, with startup kids threatening to disrupt the industry itself… For financial CTOs [chief technology officers], recruiting will no longer be a matter of efficiency, but one of sheer survival.

Expect some comic relief as uptight bankers try to play cool. Outsourcing vendors will benefit, too, but only if they can up their game to deliver real solutions, not staff augmentation.

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