For years now, banks have been slimming down and cutting out non-core functions in their business.
One area that banks have, in the past, taken ownership of is technology. Proprietary platforms, created by in-house software developers were once a staple offering, but today banks simply cannot afford to continue operating in this way.
The trend has been well publicised and comes as little surprise to the buy-side, but does this slimming down result in a lowering of service levels?
Ultimately, a bank is not a software developer and, while the individual coders might be quite adept at what they do, the processes were invariably managed by bankers and, as such, tended to reflect a very bank-centric view of the world. But this is not necessarily the way their clients view the world.
One of the biggest grumbles I hear about bank technology is that it’s highly siloed. Investment banks would traditionally run multiple departments in isolation, with desks dealing in equities, FX and derivatives having little to do with each other, despite being within the same organisation and often serving the same clients.
The result was that, for a buy-side desk dealing in multiple asset classes, they would face a complex array of different pieces of software, all designed to form a narrow range of functions and often with little focus on creating a positive user experience.
However, this seems to now be changing. Last year, I was fortunate enough to be invited to see UBS’s new single platform, UBS Neo, in action. As soon as the demo application was launched, I was immediately struck by how much it looked like a consumer-focused product. The UI was clean, clear and reminiscent of Facebook or a high-quality news service.
It was certainly an impressive evolution compared to the proprietary products of old, which would often be created from a mass of different, disorganised windows with functions accessed through a confusing array of dropdown menus and obscure keyboard shortcuts.
At the time, UBS was focused on showing me how the service would help improve the experience of their users and allow them to access all their trading information, regardless of asset class and seamlessly integrate this with comment from analysts, data feeds and market news.
Today, they announced their partner for the development of Neo, a specialist financial technology developer called Lab49. I spoke to Luke Flemmer, Lab49’s CEO, late last week and he said banks are beginning to realise that not only can they not afford the infrastructure and personnel costs to develop their own platforms entirely in-house, but that they also can’t afford to provide platforms that suit their needs, and should instead focus on the needs of the client.
The key difference in the new approach is thinking about the totality of their offering. Buy-side desks are increasingly multi-asset and they simply don’t have the resources to train people to use multiple, confusing proprietary platforms. They want market information and trading for every asset class in a single location and this requires specialist knowledge of designing user interfaces and workflows that match up with how clients want to access these tools and content.
With many multi-dealer platforms also on the market, banks need to brush up their game when it comes to developing their single bank technology. This bodes well for the financial technology specialist, who can look forward to increased demand for their services, but it will also be good for clients who will be able to use systems that have been developed with their needs in mind. Of course, this will all eventually help the bank, as a happy customer who has a great experience using its products is more likely to continue being their customer.