Jul 14, 2015

The Future of Financial Markets Operating Systems: Greenwich Associates talks HTML5

Greenwich Associates recently published study titled, "The Future of Financial Markets Operating Systems: Here Comes HTML5" examining the future of financial markets operating systems and some of the survey results were surprising. Most notably that an overwhelming percentage of respondents, either will not be or are unsure of their plans to upgrade or expand their usage of Windows 8 in the next couple of years. Daniel Connell Managing Director, Market Structure and Technology at Greenwich Associates and Jim Jockle, CMO of Numerix discuss the drivers behind this trend, and address a noticeable shift to the application needs of users.

Weigh in and continue the conversation on Twitter @nxanalytics, LinkedIn, or in the comments section.

Video transcript:

- See more at: http://www.numerix.com/model-risk-management-mother-invention#sthash.52LsKkiG.dpuf

Weigh in and continue the conversation on Twitter @nxanalytics, LinkedIn, or in the comments section.

Video transcript:

- See more at: http://www.numerix.com/model-risk-management-mother-invention#sthash.52LsKkiG.dpuf

Weigh in and continue the conversation on Twitter @nxanalytics, LinkedIn, or in the comments section.

Video transcript:

Video transcript:

- See more at: http://www.numerix.com/model-risk-management-mother-invention#sthash.52LsKkiG.dpuf

Jim: Hi Welcome to Numerix Video Blog. I’m your host Jim Jockle.

Earlier this year, Risk Magazine published a survey of risk managers looking at all of the challenges in terms of compliance, with new regulatory regimes. But, most interesting was 38 percent of the respondents of the survey cited out-of-date systems is the biggest barrier to regulatory compliance. Interesting, last week Greenwich Associates published a new report, “The Future of Financial Markets Operating Systems: Here Comes HTML5.”

Jim: Joining me today is Dan Connell, Managing Director of Greenwich Associates Market Structure and Technology Practice. Welcome Dan.

Dan: Hey. Thanks Jim. Good to be here.

Jim. Why don’t we just jump right in? You know. This is a fascinating report. It’s up on the Greenwich Associates website. So, why don’t you just tell us a little bit about how firms are starting to think about their operating systems going forward.

Dan: Yeah. Sure, sure thing. So, we’ve been seeing this come for quite some time. And, I think there’s been a number of catalysts that have gotten firms to start thinking more openly (no pun intended) about their Operating Systems and their support. And, I think not the least of which is the desire to have a consistent set of applications across platforms, and how difficult that actually is when you are tied to a specific Operating System—whether that Operating System be Microsoft, or whether it be something else, or whether it be Blackberry with some legacy mobile apps. And, so the question is how do you get application development, how do you satisfy the users across the multitude of platforms, but do it in an efficient way, where you are not programming in multiple environments?

Jim: So, one of the findings that I find really interesting was that 70 percent of the 149 institutions that you surveyed are still on Windows 7. I mean clearly, right now the market is looking forward to the introduction of Windows 10. Yet, there’s still Linux, there’s Mac. You know. How is the use of Windows 7 going to look going forward? Is…Microsoft has clearly been a dominant player in financial services. Is this trend going to continue?

Dan: Well. The answer to that is, in a yes or no way, is going to be yes. Microsoft will continue to be the dominant player. It is certainly tied as a backbone in the financial markets. I think one of the main things tying Microsoft to the desktop, quite honestly, is all of the applications that are ported over and written in Excel. And, the vast majority of desktop analytics are all done in Excel. So, Microsoft is not going away. But, I think some of the data that we got back that you referenced, Windows 7, the poor adoption of Windows 8. In fact, in our research, we found that XP actually has a higher presentation on the desktop than Windows 8 does at this point. And, there are a number of reasons for that, but, you know, we’ll see what Windows 10 can bring.

Jim: So what is going to be the catalyst for upgrade? I think according to your survey, you’re showing 35 percent are committed to Windows 10 and .net going forward. There’s some questions open as to, as it relates to that commitment. But, you know. You think of Windows 7 or XP. You know. What is that tipping point for upgrades?

Dan: Yeah, well like you mentioned. Just over 1/3 of the folks did respond that they were committed to moving forward and continuing on the Microsoft path.  I think that’s probably understated because it was also a large contingent that left it unknown. Right? And, I suspect that the vast majority of those unknowns will be Microsoft environments. Right? So, I think Microsoft at 70 percent today is probably going to continue. But, I think there is also a groundswell of support for sort of, Open System and operating and hardware platform-independent environments.  And, that’s where we struck on HTML5, and where we see a tremendous amount of adoption.

Jim: So that brings up an interesting question. Right. So, you go back a couple of years. It was: Is the future Silverlight, is the future HTML5? It looks like clearly the winner is going to be HTML5. But yet, some of the firms don’t even have an HTML5 strategy at this point. Is there a particular catalyst? Is it retail business for cross-platform and mobile? Is it internal in terms of the cross-platform?  Where is the genesis of this going to happen within an institution?

Dan: Yeah, and, you are right. The majority of firms didn’t have a strategy. Although, we found for example, on the sell-side that a high percentage did… less so on the buy-side.  And, I suppose that makes sense, as the sell-side tends to lead the charge in the technology adoption. But, I think that you hit on it. It’s the cross platform use of applications. The ability to take your desktop with you and have it on your ipad or your surface, or your iphone. And, be able to get the same experience that you have on your desktop, which in the past has been difficult. You know, you’ve had part of the experience. For example, on the financial side and even on the trading side, you’ve had much more capability in your mobile device to what we call, view. I want to see what’s happening with the market, I want to see where the market’s at, and where it’s going. I want to read updates and get news, and those kind of things. And, more and more it has turned to view and do. So people want to be able to react to that, as they would at their desktop, which requires a new set of applications. Right? And, the way to do that is to have an environment that works across platforms.

Jim: So, looking ahead. We can only assume a continued uptick in spending going forward, especially given the amount of legacy that still exists in financial institutions today?

Dan: I think that’s right. And, you know, the difficult thing there is that there are so many other pressures when it comes to budgets. Not just overall earnings pressure for the Street. But, also other pressure. Whether that is compliance taking a bigger bite out of the available budget. And then you mentioned legacy. Right? Legacy continues to take a huge chunk of the technology side and IT side of budgets. Just trying to keep things running in the older environments. Right? Which leaves a smaller slice for new things.

Jim: So Dan, final question. You know. I think a lot of us look at Operating Systems like Microsoft or, are looking at new solutions for HTML5 as something that we have to do. But, are there opportunities for competitive advantages for firms that are making these investments in new technologies? Whether that is on the trading desk in terms of drill-down analysis, or speed by Cloud. Where is the competitive, the compelling event for these firms?

Dan: Yes, There is a competitive advantage. And you briefly mentioned the Cloud. If you go back 5-7 years ago, there was a lot of hesitancy to be putting financial applications in the Cloud. And, you look around the industry now, and it’s getting much more commonplace. And, it’s commonplace because the financial advantage and processing power of the Cloud has made it one that people can’t ignore. Right? And, folks have gotten over the security issues that were prominent back then and the same type of thing is going to lend itself to the adoption of things like HTML5, when you see the replacement of legacy apps. And gee, do we want to do it in the Windows Desktop and then also do it over in the Blackberry environment, and then also do it in an ios environment? It makes no sense not to adopt one that goes across all platforms.

Jim: Actually. So that… Let me ask one more question. And, you brought up the word security. I know a lot of, with HTML5 in utilizing web services, there always have been questions as it relates to security. But, I think there’s been a lot of advancements in that area. Perhaps you have some insight and input on the security issues around the use of HTML5?

Dan: Yeah. A lot of advancements there, Jim. And, it’s become… Like I said, it’s become commonplace as a platform. And, folks have figured it out. Just as I said, like they did with the Cloud. The HTML5 environment has become much more secure. And, sort of the rapid adoption by the Street has led to that increase in security.

Jim: Well Dan, I want to thank you so much for joining us today and sharing some of the insights from your new report. Again the report by Greenwich Associates at greenwich.com is “The Future of Financial Markets Operating Systems: Here Comes HTML5.”  So, if you are interested in seeing the full breadth of that report, I urge you to go to the website. It’s an excellent read.

Well Dan I want to thank you so much for joining us. And I hope you’ll be joining us again in the future.

Speaker Biographies

Daniel J. Connell

Managing Director, Market Structure and Technology

Daniel Connell oversees the development strategy of the Firm’s Market Structure and Technology business. Prior to Greenwich Associates he was the CEO at Correlix, Inc., a leading provider of real-time performance optimization technology. Formerly, Dan worked as an executive-in-residence in the private equity industry and as a strategy consultant to technology-focused content companies. He also served as the COO of Xinhua Finance Ltd., China’s premier financial information and media company.

Dan earned his BBA in Finance from the University of Massachusetts, Amherst, and completed Executive Business Management Training at the Darden Graduate School of Business. He also attended the Global Leadership 2020 program at the Tuck School of Business at Dartmouth, University of Oxford and Shanghai Jiao Tong University.

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