For most people in the capital markets, especially those in information technology, 2013 is probably a year they would like to forget. True, the Dow is up 17% since the beginning of the year, but for most technology professionals 2013 has been another year of cost pressures and mundane regulatory and compliance work.
When you talk to most CIOs, the No. 1 priority this year was to implement technology to help their respective firms meet compliance mandates from Dodd-Frank and various regulators, including the SEC, FINRA and the CFTC. Luckily, according to one CIO, any technology purchase for a compliance project was usually rubber stamped, so creative IT leaders snuck additional purchases for other projects into the purchase orders.
Their No. 2 priority was to streamline the current application portfolio and IT architecture in order to lower operating costs to match the (usually smaller) revenue that most Wall Street firms are seeing in the current marketplace -- not exactly exciting work for developers and technologists.
[For learn more about all of the topics that will shape the business technology landscape next year, download the November Digital Issue: Capital Markets Industry Outlook 2014.]
The mundane work and constant pressure to do more with less has resulted in not so much a brain "drain" but more a brain "leak" from Wall Street. While the financial industry used to be the first choice of hotshot technologists and quantitative analysts, the prospects of getting stuck on a compliance technology initiative has some of them looking to Silicon Valley or other industries. CIOs report that while the job market is always competitive in financial services, it seems that highly skilled talent is harder to come by in recent months.
Innovation Mandate?That said, 2014 might be the year when Wall Street firms remove the shackles from the IT group and start to reinvest in systems that could be a competitive advantage to the business. To be sure, cost containment will still be a priority and firms need to make sure that the systems they run are as efficient and inexpensive as possible. But after a couple of years of focusing on compliance and cost cutting, business units are starved for innovative technologies that can help their customers. After all, business leaders are still looking for ways to create competitive advantage for their business units, and the intelligent use of technology in innovative ways is the best way to achieve their goals.
As you will read in Wall Street & Technology's Capital Markets Outlook 2014, there is a mix of cost containment topics (outsourcing and open source hardware), topics that focus on the changing marketplace (SEFs, market structure) along with some issues (big data or public cloud) that could finally change the business next year, after a few years of extreme hype.
Whatever happens in the next 12 months, however, let's hope for everyone involved that the top priority for CIOs isn't regulatory compliance again. Instead, here's hoping there is a return to innovation and changing the way the industry does business through the intelligent use of technology.