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Wall Street look to cut costs with cloud computing - survey

24 June 2009  |  15410 views  |  1  Credit Suisse building at Canary Wharf

The recession has spurred Wall street firms to investigate the use of new technology, particularly cloud computing, in a bid to overcome budgetary restrictions and skills shortages, according to a survey from IBM.

The poll of over 350 Wall Street IT professionals, conducted in conjunction with Sifma, shows that 32% predict cuts in their technology budgets in 2010, with 50% expecting them to remain the same or increase, a similar picture to last year.

This will contribute to a shift in technology use, with 46% of respondents predicting that cloud computing will force significant business change, up from 21% in 2008.

This makes it the top disruptive technology in the eyes of respondents, ahead of even operational risk modelling and mobile technologies.

IBM says cloud computing - where processing, storage, networking and applications are accessed as services over networks - has the potential to cut the costs, complexity and headaches of technology.

Ian Hurst, general manager, IBM Financial Services, says: "Firms need to capitalize on the latest technologies such as cloud computing to better manage all this data, operational risk modelling and analytics to assess it and turn it into market insight, and then mobile technologies to place it in the hands of the decision makers, wherever they are."

IT spending on compliance continues to be important, with the survey revealing that systematic risk regulation, and risk and pricing transparency expected to have the greatest potential to impact technology spend.

Randy Snook, senior MD, Sifma, says: "Often clients or regulators will call our members firms about a trade that happened several months ago. New technologies will make this far easier. Cloud computing can allow firms to keeping vast amounts of data online indefinitely and mobile technologies can give brokers instant access from anywhere so that they can quickly answer such questions without having to pull out and search their data archives."

Comments: (1)

William F. Gibson
William F. Gibson - IVY Creek Associates - Westport 25 June, 2009, 03:21

With no insult intended, for financial services "cloud computing" is "vaporware."  The degree to which SaaS can withstand the stresses of large volumes of data flows and transaction processing of equities, fixed income, FX, options, and other derivative transactions, in a crisis, is purely hypothetical and conjectural.  No large-scale transaction volume trading entity will allow itself to be exposed, and the concomitant risks incurred, to the ethereal notion of "cloud computing."

Buy-side and sell-side trading desks (and their infrastructures) may not be the epitome of how transactions SHOULD be performed, but they are less likely to be subject to the inevitable lawsuits that will arise if one relies on an untested, and non-"market practice" activity as "cloud computing."  The ERISA lawsuits alone would bankrupt the poor sap who follows this path.

This notion is being foisted by technology vendors (e.g., IBM), technology geeks, and CFOs, not compliance, risk management, operations, and legal.  Sounds like another "technology push," rather than "market pull," endeavour.

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