Q: What will be the event/trend that will define financial services in 2007?
A: Philippe Bibi, Putnam Investments: I see firms focusing on basic competencies. People do not have the same hang-ups that they used to have when it comes to outsourcing parts of their operation or parts of their processing to a firm that basically does just that for a living. We are going to start outsourcing that to a firm that has a lot of expertise. So in 2007, Putnam -- like many other firms -- is going to really focus on core competencies.
Q: Web 2.0 is all the rage. How will Web 2.0 change financial services in 2007?
A: Web 2.0 is a term that people use somewhat loosely. Web 2.0 is a new vision of how the Web is actually impacting the way business gets done. I just read that MySpace.com is now more frequented than Yahoo. That is indicative of the fact that social networking sites are taking a foothold in the way people think of the Web. And certainly younger people -- those who have grown up with MySpace and YouTube -- they will expect to have the same services and tools that they use to communicate with their friends in a business setting. Slowly but surely, this will permeate the business over the next two or three years.
Q: What are the big technology projects Putnam is working on in 2007?
A: In my mind, 64-bit computing allows us to really expand what we can do. The 64-bit technology has allowed us to scale applications and has allowed us to move many functions, such as computer-power-intensive risk calculations, to more of a real-time environment. If you look at the risk calculations that we are doing now that require a huge amount of horsepower, by using the grid computing 64-bit framework, it allows us to move to near real time. We will be able to have more-sophisticated assumptions and provide a greater level of granularity to our portfolio managers, who can take the information into consideration during the alpha-generation process.
Another thing that is important is information mobility so people can access information wherever they are. All of our wholesalers and a majority of our portfolio managers carry BlackBerrys so they can access a light version of what we have on the intranet. ... We are seeing very high usage. I guess that is why we call them CrackBerrys.
Q: What about the security concerns associated with mobile devices?
A: Yes, you open yourself up to more risks, but without going into too much detail, everything that we put out on the Web is encrypted. We are conscious of the security risks so we use the latest technologies to protect against those risks.
Q: At the end of 2007, what will your IT organization look like?
A: When we actually transition to our outsource providers, there will be a reduction in staff. That already has been planned. But more important, the outsourcing will allow us to transition staff to other areas where they are needed. As we outsource noncore functions, the staff that we have will be able to focus on the items that we feel have significant value. If we execute correctly, we will be able to do much more with less.
Q: What emerging technologies or business strategies will have the potential to change the industry in 2007?
A: The mutual fund industry is spreading its wings and dealing with alternative products, such as derivatives. The amount of sophistication that this requires to compete with hedge funds is high. Mutual funds need the technology to manage these types of products. Putnam is ready to do this because we have been preparing for it for a while.
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