Technology has long played a key role in the financial services industry. Today, however, a number of new and rapidly accelerating trends are emerging that promise to usher in an entirely new paradigm. Information technology can no longer simply be an “add on” at the periphery of the business, but rather must be deeply embedded at its core. This Vision report brings together the insights and expertise of State Street’s executives to examine the use of technology across three distinct areas of financial services: analytics, electronic trading and regulation, and portfolio allocation and modeling. Those companies that are able to capitalize on the capabilities and opportunities that this changing environment presents will be well positioned to enjoy a distinct competitive advantage.
How is the use of technology in the financial services industry changing?
Simply put, technology is taking on a much greater role and is becoming inextricably interwoven into the DNA of the industry.
What’s driving this change?
Several factors. One is clients’ demands for more and faster information, greater transparency, and improved risk management. Another is that the perceived value of data has fundamentally shifted. The globalization of the workforce, which has enabled around-the-clock schedules, the acceptance of open source-based strategies and the use of multiple procurement partners, is also an important factor. Collectively, these changes have laid the groundwork for the emergence of a new business and IT model that will likely upend conventional thinking about the roles and capabilities of IT systems.
What will the next generation of financial services technology look like?
Next generation technology will integrate and correlate information from a range of sources like never before, and will produce results that far exceed the sum of their parts. In the future, we will apply massive computing power to data, allowing end users to experience a seamless flow of information through an expandable set of data management processing tools across the full spectrum of risk and return management. We are already seeing this with the emergence of sophisticated dashboards and cloud computing.
What benefits will it bring?
Next generation technology will have the scale and flexibility to dramatically drive down data costs and will eventually evolve to offer predictive capabilities, among other highly useful functions. Plus, it will enhance the risk and compliance environment, and empower end users to accomplish business objectives rapidly and cost-effectively.
What are the implications of the convergence of advanced business processes and technology?
This convergence promises to fundamentally change the way investment decisions are considered and made. Ultimately, it will lead to increased transparency and openness that protects the best interests of market players, their clients and the economies from which they operate.