Making a Connection

In an environment in which margins are shrinking, these organizations also tend to look for solutions that allow them to focus on their core competencies, rather than technology development. While financial firms need good technology, they are not in the technology business.

Outsourcing is increasingly identified as the answer, not only for cost cutting, but also to create leverage for long-term business success. As a result, hosted solutions are now often seen as a superior way to address a wide range of needs for these firms, from providing infrastructural capabilities such as storage, bandwidth or data requirements, to software-as-a-service solutions under which the vendor builds and maintains an entire system.

Addressing Conditions 

But how can third parties help firms use technology to address current and future market conditions? As organizations add to their operational overheads by developing responses to market changes such as new asset classes or regulatory requirements, it becomes increasingly difficult to react quickly. The challenge here usually centers on connectivity and integration: How do I satisfy a new regulatory requirement? How do I integrate a newly traded asset class, and how do I process it? 

Ultimately, firms have only three choices: build and maintain the technology themselves, hire consultants, or engage a true technology partner. Using an internal technology team can be time-intensive depending on the size of the legacy systems, and may divert attention from other priorities. A short-term consultant could handle the development, but the organization must return to the consultant for any future changes. The third, and increasingly more appealing, method for many firms today is to use a hosted middleware solution that connects to an organization’s internal systems to reduce the cost of change and maintenance. While many vendors offer such solutions, financial firms that use generic technology often require additional consultants that understand the business context to ensure appropriate workflow. 

Optimal Solution

Therefore, when partnering with a technology provider the optimal solution is an organization with a breadth and depth of experience developing capital markets solutions that can also provide and manage a hosted middleware solution. With this strategy, financial firms can truly be nimble.

There are several key issues to consider when searching for the right technology partner. Security is always a top priority for clients and so a hosted middleware solution should provide encryption for data in transit and data at rest. Bloomberg has provided one of the most secure financial networks for 30 years. We zone the environment specifically for the client, so even though this is a hosted, managed service and Bloomberg is a managed partner, the client’s data is protected exclusively. Even our own service representatives need the client’s permission and must also use multi-factor authentication to access their systems.

A middleware solution should also be able to provide the correct level of performance for each situation, cutting costs for the client. Market participants need robust connectivity to stream prices and execute orders in a low-latency environment. But when it comes to enterprise workflow, trading information often simply needs to be synchronized throughout the organization. High-cost, super-low-latency solutions are not necessary for every aspect of the workflow. Finding the right solution for the situation, however, is the key.

Experience 

In creating a hosted middleware solution that specifically addresses the needs of capital market participants, Bloomberg certainly has experience on its side. Drawing on a 30-year history of developing solutions specifically for the capital markets, we can offer a completely managed solution with resources that can build and maintain systems in a hosted capacity. We offer integrated data and connectivity and our middleware operates as if locally installed in the client’s own environment. This gives clients the control, view and access they desire without the burden of hardware, upgrades and maintenance.

At a very basic level, a technology partner must be able meet its clients’ business needs now and in the future, and do so in a secure fashion. However, organizations should also look beyond that for a technology partner with experience and maturity. By finding a true industry partner, financial firms will gain access to innovative systems and processes that get to the heart of the key issues dominating the capital markets today, and in the future. 

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