IBM answered my call and hired me as a computer programmer right out of SUNY-Albany. So began my career in IT. Then things changed. I found my way to the IBM Wall Street Office, embarked on a career in sales, solving problems with computers in a different way. For the past three decades, I have worked at large and small firms, helping business users within financial institutions address their needs with computer-based solutions. Throughout it all, outsourcing to a third-party provider or cloud computing, has and continues to be a consistent theme.
Over the span of my career, I have witnessed cloud-based technology (outsourcing) become a major change agent in the outsourcing of financial technology. The trend only continues to gain momentum as “…financial institutions are increasingly switching over to cloud-based services, and their reservations about the cloud are quickly being chipped away,” writes Becca Lipman, senior editor at Wall Street & Technology in Hedge Funds Increasingly Using Cloud for Back-end Computing, August 2013. I am not at all surprised that more and more alternative investment firms are embracing this technology. Take a walk down memory lane with me to see why.
During the ‘80s as an IBMer, I observed niche hardware suppliers aggressively selling to frustrated business users within the larger Wall Street firms. To that point, front and middle office functions in need of powerful analytics were going outside to the likes of Cray, an expensive specialized service bureau. The mini-computer – followed by high-performance technology that matured into the UNIX workstation market – delivered powerful processing capability that could run on-premise and largely outside the control of the IT group’s data center, the domain of the IBM mainframe computers.
IBM mainframes from that point forward were subject to the cry that they were at the end of their useful life. Not so fast! Gabriel Lowy’s August 2013 article, New Life in the Cloud for Mainframes?, points out, “The mainframe’s strongest assets – scalability, reliability, availability, security, and manageability – are the very characteristics that enterprises are most concerned about as they consider moving business-critical services to a cloud-based architecture.” Riding the introduction of the personal computer, Advent Software launched a desktop portfolio accounting application for buy-side financial analysts in 1983. These analysts could now have full control of that accounting app, PC hardware, and client data as an alternative to relying on outside accounting services available in those days, such as Shaw Data Services. This trend continued after I joined Advent as the firm added trade management software, followed by their powerful global portfolio accounting engine in the ‘90s. You could see how vital it was for the users at investment management firms to readily access these powerful application systems.
Fast forward: Advent, already hosting a number of their software applications within their OnDemand Software-as-a-Service model, just announced Advent Direct™, a new cloud platform that will complement and extend the value of their existing products with a broad range of new solutions. I believe in Advent’s expressed intent to extend those solutions by accepting app plug-ins from third party software suppliers like G2 FinTech -- make my day.
[Outgrowing Your Data Centers? Look to the Cloud for Relief .]
Next: on to my stint at a brokerage / technology firm – I had to go back to school, for my Series 7, 63 and 24 licenses. EdgeTrade captured lighting-in-a-bottle with its Find and Nail (FAN) algorithm during the 2006-2007 timeframe, enabling traders to find the other side of the trade by simultaneously accessing dark pools and public markets. The sales efforts were primarily directed to business users: traders and portfolio managers. This was a terrific example of cloud-based technology successfully empowering the buy-side.
My career arc has most recently taken me to G2 FinTech. G2 FinTech’s flagship software product, TaxGopher®, performs tax analysis of securities transactions, with the primary focus of serving the alternative investment community. TaxGopher is effectively enabling tax analysis to be performed by the business user working in non-traditional tax analysis functions. The combination of (1) automating the data feed from a hedge fund’s investment book, (2) tax-smart software, and (3) running on fast hardware are empowering the buy-side business user in a way not possible before.
The G2 FinTech TaxGopher story is one of delivering high-performance, cost-effective technology within the user’s control that enables on-demand tax analysis. The cloud is just one deployment option to achieve this goal.
Client-based requirements will continue to drive cloud-based technology usage as a specialized, highly-evolved flavor of outsourcing. Market-driven forces have transformed the dated paradigm of an inflexible service bureau into a readily accessible, technology-enabled service that increasingly incorporates the cloud as a critical ingredient.
There’s every indication that cloud-based technology will continue to be a major change agent in the outsourcing of financial technology — it’s undeniable.
Brian Roberti is managing director at G2 FinTech, where he is responsible for sales, marketing and business development.