2019 continues 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 certainly see that. Cost continues to be a focus of the industry, so firms will be prudent where internal investments will be made and cutting things that are not considered to be core to their forward-looking strategies.
Technology as a differentiator and automation to achieve efficiency remains as a critical goal for many and there will be continued investments in components and technologies that help financial firms to accelerate developments and produce customer value more 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, Better”, spending on development tools to help accelerate this journey and convert legacy practices will be key to success. 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 and to better make use of hardware, as well as to rationalize the estate that needs to be managed and protected.
Cross application communication on the user interface 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 FinTechs without having to invest in full scale integration, but still make use of tools and applications cohesively. In a similar fashion, wider open source initiatives within banking are starting to gather pace including various FinOS initiatives to allow better collaboration across banking technology and democratise those technologies that are important foundational benefits but not seen as a differentiating competitive advantage.
" The investments in Data and Analytics will continue, and analysis, rather than just the capture of information, will be the focus area"
The investments in Data and Analytics will continue, and analysis, rather than just the 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 Algos to operate at a wider scale and for more use cases. Different Algo 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 very much starting to see some banks differentiate around execution, leveraging AI for Algo trading vs. traditional/ ML-based Algos 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 investments in the Fintech space, financial firms will be focused on creating the right environment for technology staff as well as partnerships with Fintechs to have the best of both worlds. Financial firms that can harness and evolve the skills of their technology 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 Fintechs have been able to get products to markets and innovate so quickly.