Phased approach delivers rapid tech benefits


In an environment where technology is constantly evolving and customer preferences can change rapidly, Caplin’s agile approach to project development enables banks to see a rapid return on their investment.

The banking sector has a patchy record at best when it comes to implementing major technology projects. Despite massive expenditure on hardware, software and consultancy – research from Celent suggests that European banks alone spent more than $70bn on software and information technology in 2017 – institutions are often left unsatisfied with the end result.

Lengthy implementation cycles are a significant factor in banks’ dissatisfaction with large scale projects, which is why Caplin’s preferred engagement model is to start small with a ‘lite’ proof of concept and analysis phase. This is commercially less risky than a full project while allowing for planning of the ‘main event’ and leaving the customer with working software and collateral that they can show around the organisation and use to build support for the larger project.

Agile software development is not a new concept. The agile ‘manifesto’ was written in 2001 by a group of developers who suggested that producing working software was more important than creating mountains of documentation and that vendors should prioritise customer collaboration and the ability to respond to change.

This approach allows new products to be brought to market more quickly and scaled more rapidly than under conventional development processes. Our projects are delivered in two-weekly ‘sprints’ with tight feedback loops for each cycle, which enable us to quickly identify what is working well and build on the elements of the project that are meeting the client’s objectives.

The agile approach to development has been implemented across trading markets, enabling banks to test new products and get them in front of their customers in as little as a few weeks. Because the process is completed in such a short timeframe it is possible to demonstrate value very quickly.

The key here is to focus on the highest value functions that need to be delivered. In many cases developers are asked to work on multiple projects simultaneously, even though the reality is that they will only ever be able to deliver a small fraction of these projects to completion.

Another benefit for banks in adopting an agile approach is that they can quickly adapt the development process to reflect feedback from customers and react more rapidly to changes in the regulatory environment.

This is vital in fast-moving markets where an application could be effectively redundant by the time it goes through the conventional development process – too much forward planning doesn’t always work!

The Capital Markets’ Industrial Revolution


Interesting comparison from GreySpark in their latest research report. Comparing the digital transformation of investment banking to the automation of manufacturing processes in industries such as motor and aircraft manufacturers.

Their report draws analogies, between investment banking, and the motor and aircraft industries, which also experienced heavy regulatory burden, regular government interference, ever evolving demand patterns, regular bouts of over-capacity and a critical requirement to pool resources in order to innovate.

In their opinion, banks will reinvent their operating models on three pillars:

  1. A fully-automated manufacturing plant for the creation, assembly and packaging of financial products and services.
  2. A multi-channel distribution franchise that provides a consistent user experience for all interactions between the bank and its clients.
  3. Data managed as an asset across the entire supply chain.

The adoption of this new operating model has significant implications:

  • Investment banks’ supply and value chains will invariably extend beyond the enterprise and incorporate suppliers, partners, market infrastructure and shared utilities.
  • The number of joint-ventures and strategic alliances between complementary institutions will multiply as banks focus on their core expertise, client franchises and geographies.
  • As value creation will be effectively distributed across functions, the manner in which it is accounted for will also change – determining where key decisions are made and how individual contributions are rewarded.

Link to report here (behind paywall):

The continual rise of non-bank market-makers.


I have covered the rise of ‘non-bank’ or ‘alternative’ market-makers a few times recently, notably here, here and here.

Looking at how, armed with market leading technology, talented etrading techies from sell-side firms and teams of razor-sharp quants, these firms are now providing deep consistent liquidity to the market in a capacity previously the preserve of the top-tier ‘flow’ monster’ banks.

The perception of non-bank market makers has traditionally been Continue reading

Interesting Celent report on future of Spot FX trading technology & platforms


Just finished reviewing an interesting Celent report by Brad Bailey, on evolving spot FX market structure and technology trends in light of changes in global regulation, a blurring of traditional liquidity pools and the ongoing competitive landscape.

Brad touches on a number of the themes we have covered here over the year, but it’s always good to have someone else’s perspective on them.

The themes covered being: Continue reading

From FT yesterday: Banks seek the key to blockchain


Blythe Masters ex-head of commodities at JP Morgan now runs a Blockchain startup call ‘Digital Asset Holdings‘, which  uses digital technology to enhance settlement and recording of both digital and mainstream financial assets. Last week, the company acquired ‘BlockStack.io‘, which offers blockchain as a service (perhaps BaaS, or BCaaS).

Again for those Continue reading

SalesTrader dashboards


Sales Traders have traditionally been poorly served in terms of dedicated sales trader GUIs. This I think is related to salespeople being overly protective of their client relationships, and fearful that quoting clients electronically would in some way result in them being disintermediated by the machine.

Preferring instead to trade with clients by phone, thus ‘protecting and enhancing their personal ‘high touch’ relationship’ with the client. As a result, Sales GUIs never really received the attention they deserved, or needed.

Well, that’s going to change, for a variety of reasons, the main ones being: Continue reading

Here Comes HTML5 for Financial Markets (Greenwich Associates)


Came across this white paper from Greenwich Associates (from Jun 15) on the adoption of HTML5 within financial markets.

The report is based on interviews with 149 financial institutions, and found that technologists are rapidly shifting their focus toward the application needs of users, rather than the underlying operating system (OS). The focus is now on ‘The cloud, HTML5 and mobile’ (as was clearly identified in Caplin’s HTML5 in 2013: Where Next?  and Trading on the move white papers).

HTML5, is swiftly proving itself by delivering native, real-time financial applications that are OS and device agnostic. However, many who are unsure about even the near-term future of their OS and device requirements still aren’t devising an HTML5 strategy. This lack of planning may leave many ill-prepared for an OS or device upheaval within their firm.

Windows 7 still main desktop OS within Continue reading