09:25 AM
Henry Chien, Tabb Group
Henry Chien, Tabb Group

The Mobile Frontier: Next-Gen Apps on the Street

The rise of mobile apps is transforming Wall Street, enhancing the customer experience, improving portfolio and risk management, advancing the search for alpha, and even strengthening compliance.

Mobility is at the forefront of today's frenetic technology development. Estimates predict smartphone ownership in the United States will grow from 35 percent of consumers in 2011 to 46 percent in 2012. The mobile app economy reached $3.5 billion in revenues last year. And the mobile revolution isn't limited to photo-sharing (Instagram) or gaming (Angry Birds) -- app usage is spreading to the capital markets. Already, institutional equity research is largely available via mobile apps, and some financial institutions are seeing as much as 5 percent of trade traffic come from the mobile channel.

Meet The New TraderThere are more than 6 billion mobile phones worldwide, according to a report from the World Bank, which says the total number of mobile phones globally will soon exceed the human population. So it's no surprise that the mobile channel and the expectations it has spawned are redefining financial services. Wall Street & Technology's August digital issue examines how capital markets firms are transforming their channel strategies to meet users' anytime/anywhere demands and to seize the opportunities mobile offers.

Indeed, most technology executives agree that mobility is one of the few topics in the industry that isn't overhyped. The combination of a thin-profile, touchpad interface and high-resolution graphics make tablets a compelling solution for personalized presentation and demonstrations. Online brokers are reinventing the trading interface, with trading in the cloud already a reality. Most custodians today offer mobile platforms for financial advisers that offer real-time portfolio analytics at a touch of the finger. Tablets make the entire interaction between the adviser and client more mobile, more interactive and seamless. And innovative cloud-based apps -- such as Wikinvest for portfolio management, Mint for financial planning and Xignite for real-time market data -- are helping advisers better serve clients.

The adoption of next-generation internal institutional mobility solutions also is increasing. Internal information is increasingly being "pushed" to iPhones and iPads for industry professionals on the road. Portfolio managers and analysts can access portfolio-level information on the go more easily than ever. In an age when news and information travel fast, waiting a few hours, or even a few minutes, before a unique insight is communicated to a portfolio manager incurs tremendous opportunity costs. An analyst at an investor conference or sitting with one of the firm's portfolio companies can now communicate notes and opinions across the organization immediately.

[Mobile, HTML5 and Multichanneling in Wealth Management]

Even among firms that are less concerned about communicating faster, there are still compelling drivers to focus on mobility. Social networks such as Twitter already offer the potential for crowd sentiment and analytics that have alpha-generating potential. Many investment advisors are beginning to recognize the potential of social media channels such as tweets and blog posts as a way to effectively communicate their unique insights. As this becomes more institutionalized in practice, new mobile platforms will emerge to manage the unique nature of this data. Good Software, for example, is effective for email security and enterprise data on an employee's own iPhone. Under a more watchful Securities and Exchange Commission (SEC) and FBI, hedge funds also need to make sure they can show an audit trail of research and ideas that drive their investment decisions. Meanwhile, chief technology officers point out that the more channels there are to facilitate internal communication, the less dialogue that will go uncaptured.

Pick a Device, Any Device

While tablet-driven computing is the buzz in mobility, the trend is not exclusive to tablets. Financial institutions are using virtual aggregation of data sets for on-demand access and efficient use of storage capacity; with cloud computing, the next step is virtualization of the entire desktop experience, allowing advisers to access various databases and analytic tools -- from historical fund performance to granular portfolio data to research material -- all on demand and from any device.

For trading desks in a market environment driven by central bank interventions, this means updated virtual FX risk models that analysts from London to New York can access instantly from a smartphone, tablet or desktop at work or home. Risk managers will always have the latest internal analytics, from global correlation matrices to the firm's proprietary volatility forecasts. Desktop virtualization is still in its early stages, but mobility, the rise of the app and the resulting opportunities for cost cutting are moving 'Bring Your Own Device' up the priority list.

Already, we are seeing exciting possibilities for the use of mobile apps in capital markets. Macro portfolio managers need apps with portfolio risk metrics and market alerts to quickly react to shifts in volatility. Financial advisers can bring iPads to client meetings loaded with cloud-based portfolio analytics and fund databases that make discussions around investment planning much more effective. And market makers will have streaming apps that analyze stock tweets in real-time. The mobile revolution is transforming Wall Street into a more social, mobile and flexible environment.

Henry Chien joined Tabb Group in March 2010 as a research analyst. He currently focuses his research efforts on the OTC and listed equity derivatives markets.

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