Tim Bourgaize Murray: A Seat at the Disruption Table

One of the practical joys of writing about the buy side is that the kit—while always improving and sometimes overlapping in functionality—generally falls into fairly easily defined categories. Throw an order management system (OMS), a performance and attribution system, and some portfolio accounting together, sprinkle in risk and reporting analytics on top and some compliance, and you’re done. Let the sell side and fund administrators handle the rest.

Investment banks are naturally a different story, where technology processes and transformation are often dispersed and hodgepodge. Their fluidity makes comparisons—and at times, even definitions—difficult to pull off. But they also offer greater possibilities for what a future state might look like, letting newer ideas into the mix.

Ubiquitous
That was evident this month as I profiled UBS’ Oliver Bussmann. He is about as ubiquitous as a banking CIO can get, thanks to his massive Twitter following, and, indeed, his healthy obsession with social media overall—both personal and as a tool to foster internal technology optimization.

In many ways, Bussmann and UBS seem perfectly matched, considering what the latter is trying to do with a major change management push. And the fact that the CIO is not only willing to consider new technologies like Blockchain, but is using his platform to actively cheerlead them on, proves he’s for real.

That got me thinking: Is Bussmann’s tech progressivism the province of the sell side alone? For that matter, should it be? David Rowe, a senior strategist at Misys, wrote in the January edition of Waters’ sibling magazine Risk that disruptive developments in compute power and the Internet of Things are going to be there for the adopting in coming years; it’s just a matter of when. But he also warned that much of financial services would miss out on their benefit, “constrained by a reluctance to surrender decades-old assumptions,” as he put it.

There’s no way that something like Blockchain will gain wider adoption without the holders of the assets acceding to such a monumental change.

Admittedly, in three years of attending buy-side technology events, I’ve heard relatively little about social media applications—mostly in the context of mobility or security—come up in conversation, and next to nothing about Blockchain or, for that matter, its fledgling virtual currency progenitor, Bitcoin. On the other hand, Sibos 2014 was—pardon the pun—chockablock with chatter about both.

Too Formalized
You could argue that the buy side’s tech duties have become very formalized, even too formalized. Some investment managers’ C-levels may well care too much about what’s necessary, and not enough about what’s possible. Like most things, though, this will probably depend on their size, their diversification, and also on the institutional importance, and personal willingness, of their CTO or CIO to “thought lead” on such issues, rather than focusing on more pressing contemporary concerns like cybersecurity.

Like at UBS, the CTO at Allianz or BlackRock is naturally more likely to spend time on bleeding-edge or even “blue sky” technologies and advanced social media initiatives, than one just trying to lift a boutique manager off the ground, where all seven members of the firm’s senior staff don’t have time to be tweeting at all. That’s fairly understandable. It’s a function of the historical buy side-sell side relationship, and of opportunity cost.

Communicators like Bussmann are fantastic to have; the industry desperately needs more listeners to engage with them. There’s no way that something like a Blockchain ledger for securities settlement will gain wider adoption without the holders of the assets acceding to such a monumental change. In fact, they may even need to drive it. That’s especially true when, unlike bring-your-own-device, the technology isn’t benefiting from a natural, pervasive push behind consumer technology.

As we always hear, the rate of change is constantly accelerating, but change won’t always present itself cleanly or obviously. The buy side deserves a seat at the table, figuring it all out. And it should take that seat enthusiastically.