Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Risk Management

07:30 AM
Marc J. Firenze
Marc J. Firenze
Connect Directly

The Future of FinTech

Making predictions in technology is tricky but there are a couple of prevailing themes that are likely to influence how the industry will evolve over the next five to 10 years.

I am sometimes asked what the ‘next big thing’ in technology is going to be when talking to investment firms. Making predictions in technology is tricky but there are a couple of prevailing themes that are likely to influence how the industry will evolve over the next five to 10 years. These themes influence Eagle’s thinking as it develops its new solutions.

The first theme is driven by the way the finance industry itself is developing. We’ve seen how the regulatory environment has shifted towards a greater focus on transparency, data security and risk management. This pattern is bound to prevail and will guide the shape of regulation for the foreseeable future. At the same time the asset management industry continues to grow with firms becoming increasingly globalized and asset classes becoming ever more complex. Complexity is not the friend of transparency and data management is going to be -- and indeed already is -- a key battleground for the investment management industry as it accommodates these two competing demands.

The second theme is how the users and consumers of technology are changing. Currently, the typical user of Eagle’s software is aged between 30 and 40. They have experienced a business world before the dominance of the internet and hyper-connectivity and have grown up alongside the computing industry. In the next five to 10 years this generation will be replaced by a younger generation whose experience and expectation of technology is very different. They will demand intuitive functionality and, while they won’t be so conscious of where their technology is located, they will expect to be able to access it anywhere via any platform. They will also expect to be able to share and discuss their experiences with other users across the globe. It’s with these users and their expectations in mind that vendors need to be developing their solutions.

There are a number of ways these two themes manifest themselves, with many already in motion.

Simplification and modernization: As new technology is introduced, new solutions are enabled. Firms must be excellent at optimizing the balance between reducing costs through rationalization and investing to increase business value. Hosted solutions are a perfect marriage of these two objectives. First, technology expenses are optimized because they enable ‘pay for what you consume’ models. Second, hosting providers are motivated to demonstrate the business value to their clients with real tangible examples of how they are helping to deliver it. A further positive side effect is that hosted solutions are incentivized to be scalable for their own growth needs, enabling firms to easily roll their technology out to new geographies as they grow. As firms recognize these benefits, I expect them to increasingly turn to such frameworks.

Information risk management: The focus on risk management practices by regulators is not going away and pressure will increasingly shift to technology vendors to ensure systematic compliance as the investment firms focus on running their businesses. Data will become even ‘bigger’ as investment complexity increases and the use of data to support risk management practices is in its infancy. As a result, data management and data governance processes will become increasingly important. Timely access to accurate data can drive better decision making. Consequently, many firms are currently looking to implement solutions that will enable them to understand their data, who is using it and for what across their entire organization and ecosystem on a regular basis. In the next five years or so, having complete command of your IBOR will be mandatory for survival.

Mobility and data visualization: Enabling data to be accessed anywhere and at any time implies that interfaces must be available on all platforms with intuitive functionality. For example, reporting and data visualization tools will be more dynamic and solutions must be more packaged for the specific use case being addressed. Much of this technology already exists but user adoption is likely to accelerate in the coming years.

Social interaction: Users expect to be able to network, exchange ideas and leverage other users’ work and experience. The vendor will need to be part of these communities to be notified of problems or bugs and to share fixes and news of forthcoming upgrades or product developments. Software development is likely to be more of a collaborative or consultative process between user and vendor.

The role of technology in the success and effectiveness of investment firms looks set to increase in the coming years. It is increasingly seen as an area that can drive efficiency, accuracy and compliance by management teams. The challenge for the industry is to ensure the products and solutions help firms to achieve these objectives. Just as important, however, is that functionality and usability also evolve to meet the requirements of a new user base.

As Chief Technology Officer of Eagle Investment Systems , Marc Firenze drives the software, technology, and architecture decisions across Eagle's investment management suite and ensures that development directly supports the firm's corporate vision. With more than 20 ... View Full Bio
More Commentary
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
Register for Wall Street & Technology Newsletters
Inside Abel Noser's Trading Floor
Inside Abel Noser's Trading Floor
Advanced Trading takes you on an exclusive tour of Abel Noser's New York trading floor, where the agency broker known for transaction cost analysis, is customizing algorithms for the buy side, while growing its fixed income trading and transitions business.