Role of Information Technology in Investment BankingApril 10, 2014
In today’s markets, it is technology that turns a trading strategy into a trading profit, enables new pricing models and introducing products to the market. Investment banking industry thrives on the flow, analysis and interpretation of information and technology has the power to deliver competitive advantage.
Technology touches every part of an investment bank and underpins every deal that is made. When a system is unavailable, millions can be lost. So robust systems and infrastructure more than important, they are fundamental to investment banking’s ability to operate & make profits.
Another challenge is the evolving regulatory burden of the financial sector. Technology has to do more than keep up; it has to drive the changes and developments necessary to keep investment banks ahead of the competition.
Investment banks rely on advanced technologies in the front office to enable high-speed, high-frequency trading. Until now, the upfront benefits from this activity have been so enormous that the complexity and inefficiency of post-trade processes and systems have often been overlooked.
That is changing fast. The highest performing investment banks are now using their front-office technologies in bold, innovative ways as a source of competitive advantage for the whole business. By concurrently enabling interdependent business functions, such as risk management, settlement and financial reporting, these technologies are transforming the way organizations ‘think’, ‘react’ and ‘operate’.
There are a number of reasons for change in this trend:
• Management is demanding integrated, proactive technology infrastructures that can anticipate the impact of new market and regulatory developments and adapt to the same.
• Technical leaders are under mounting pressure to get a return on their massive investments in technology by using these assets to drive down costs, as well as driving up revenues (traditionally the principal focus for front-office technologies)
• This increasing emphasis on ROI means technology leaders need to develop flexible IT systems / assets that, by adapting to business change, can appreciate in value over time.
Understanding complex technology is one aspect, but a firm grasp of business problems is also essential. Investment Banking IT Professionals work closely with the sales, trading floor, middle office operations to develop the software that enables them to make the split second decisions or use their creativity and initiative to enhance state-of-the-art front-to-back systems and databases. Whatever the task investment banking technologists work in a fast-moving environment where solutions move from concept to implementation in weeks and months rather than years.