Risk Management

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Greg MacSweeney
Greg MacSweeney
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Tech Innovation -- With an Eye Toward Quality

Even with the frequent tech failures, scathing headlines and mounting regulatory fines, technology innovation is thriving on the Street -- with an emphasis on testing and quality.

Producing an annual compilation of the financial services industry's top technology minds used to be a lot of fun. Meeting and speaking with truly innovative IT executives is eye-opening and enlightening. Today, however, the potential list of innovative CIOs at leading financial firms is getting pretty short. While some capital market firms are under regulatory scrutiny -- for Libor rate rigging, failure to report investment client taxes, improper risk oversight and other infractions -- others are playing a game of one-upmanship when it comes to spectacular technology failures.

In the past six months, the markets have witnessed BATS' IPO implode on its own exchange because of a problem with its matching engine, Facebook's IPO flounder because of quoting problems on Nasdaq and, most recently, a Knight Capital software error that almost sank the 17-year-old firm in 45 minutes. And each subsequent technology glitch has grown in size. Knight's out-of-control trading algo left the Jersey City, N.J.-based market maker holding $7 billion worth of securities at one point, resulting in a $400 million trading loss. Can you say #Epicfail?

[Wall Street Is Leaderless, And That Might Be Fine]

Meanwhile, JPMorgan has been plagued by the London Whale (who has cost the bank $5.8 billion and counting), Barclays has admitted wrongdoing in the Libor rate-rigging scandal, and 15 other banks are under investigation, including Citi, Bank of America, Credit Suisse, Deutsche Bank, HSBC, JPMorgan, RBC, RBS and UBS. With these banks and others dropping the ball when it comes to compliance and risk management -- parts of the business that are closely tied to technology -- how is a tech journalist supposed to recognize excellence in IT leadership?

Never fear. Even with the frequent tech failures, scathing headlines and mounting regulatory fines, innovation is thriving on the Street, and Wall Street & Technology's 2012 Gold Book recognizes some of the most talented and proficient IT executives in the industry. And to a person, they all stress the importance of software quality, testing and system stability in one way or another.

Fidelity CIO Ron DePoalo says the firm's IT success metrics include the overall quality of software, Newedge CIO Stephen Davy discusses how forensic analysis is helping the firm improve system performance, Direct Edge CIO Saro Jahani stresses the importance of platform stability over speed, and Northern Trust CTO Scott Murray talks about his firm's technology testing center of excellence. Notedly, only Murray's interview took place after the Knight Capital incident; the other Gold Book honorees didn't need a reason to boast about their QA focus. In hindsight, the seems eerily clairvoyant. If it wasn't a high priority for all firms before the Knightmare, hopefully it is now.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio
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