NEW YORK – June 11, 2008 — Increased regulatory pressures, unparalleled M&A activity, the “credit crunch” and dollar woes continue to inflict damage on the capital markets sector. But technology can still provide a critical lever for growth, Microsoft demonstrated today at the SIFMA (Securities Industry and Financial Markets Association) Technology Management Conference & Exhibit in New York. With a familiar, easy-to-use and widely supported software platform, Microsoft can assist Wall Street firms with solutions ranging from business intelligence to high-performance computing to mobility. To learn more about these offerings, as well as what technology news was unveiled at the conference, PressPass spoke with Craig Saint-Amour, U.S. capital markets industry solutions director, Microsoft.
PressPass: There has been a lot of news around the “credit crunch” and its impact on Wall Street. What have you seen from a technology standpoint related to the crisis?
Saint-Amour: There is no doubt that the credit crisis has put enormous pressure on capital markets firms to uncover risk and determine their exposure. Technology is playing a huge role in this case. For example, Wall Street firms are using high-performance computing (HPC) solutions to perform more real-time or intra-day risk analysis of trades and their impact on portfolios. Firms are also turning to business intelligence tools more than ever before to provide an early-warning system around key indicators of exposure and risk. And, finally, risk and compliance systems are also being used to ensure compliance with new regulations and practices emerging from the crisis.
Interestingly, Microsoft has solutions in all of those areas, from our HPC platform, Windows HPC Server 2008, to our business intelligence solutions, such as Microsoft Office PerformancePoint Server 2007, to the various Windows-based risk and compliance offerings on the market, such as the work we’re doing with ClusterSeven to help firms manage their governance, risk and regulatory compliance (GRC) obligations.
PressPass: Much of the news coverage around the crisis has speculated whether it was a “people problem,” a “technology problem” or a “process problem.” What do you think?
Saint-Amour: It’s difficult to say exactly what caused the crisis, but – from my perspective, working for a technology leader – I certainly believe that certain technology factors were at play. For example, one of the bigger issues on Wall Street is what I call the “data deluge.” The sheer quantity of data captured and analyzed by capital markets firms has grown exponentially, and many firms are unable to successfully compute extensive data sets in sync with a quickening market. Another issue stems from data being broken up into many disparate IT systems. Not only does this hinder firms’ ability to get a single point of truth of its exposure at any given point in time, but it also has a negative effect on customer service – as it’s hard to take a holistic view of a large enterprise or high-net-worth customer, and they are demanding that kind of 360-degree service these days.
PressPass: Earlier, you mentioned HPC and its relationship to risk. How can firms leverage HPC solutions to monitor compliance and mitigate risk?
Saint-Amour: Computational finance can especially benefit from the speed improvements of HPC. Although credit derivatives and exotic investments are still gaining in popularity despite the crisis, there is an obvious cost associated with this trend. As new alternative investment products are introduced, risk or portfolio managers need analysis tools to get an accurate and timely view of a funds worth and value at risk (VaR). However, advances in pricing, advanced analytics, and risk and margin analysis tools now require computational horsepower that exceeds the power of a desktop computer.
During SIFMA, we’ll showcase a number of tools and solutions that help firms manage and analyze pertinent financial data for improved decision making. For example, Windows HPC Server 2008 provides a secure, cost-effective solution that allows analysts to spend more time analyzing complex data sets to make better decisions. Integration with mainstream applications, such as Microsoft Office Excel 2007, enables firms to prototype on a client computer while doing deployment on server computers. In addition, developers can leverage the familiar Windows-based integrated development environment (IDE) of Microsoft Visual Studio 2008. They can build and deploy parallel, Microsoft .NET Framework-based applications quickly and easily. And by integrating with products like Microsoft Excel, customers can model in Excel then go into production with as little rework and technical risk as possible. Also, integration with SharePoint Server 2007 provides the ability to lock down models as part of Sarbanes Oxley (SOX) compliance.
PressPass: During the show, Microsoft is releasing its third-annual HPC on Wall Street survey. How do you see the uses of HPC changing on the street?
Saint-Amour: This year’s Microsoft “HPC in Capital Markets Survey 2008” has shown that, due to the credit crisis, firms are facing increased overall demands to run real-time market risk analysis (25 percent), middle-office risk analytics (34 percent) and portfolio-related calculations, such as rebalancing and hedging strategies (42 percent). Perhaps to be expected, firms are turning to their growing HPC resources to assist with these activities, with companies reporting “a lot or some” demand for HPC to handle real-time market risk analysis (51 percent), middle-office risk analytics (50 percent) and portfolio-related calculations (54 percent).
In this tough economic environment, lowering operational costs and increasing overall productivity at all levels of a firms’ HPC value chain (end user – developer – operations staff) is at the forefront of every manager’s mind. While outright performance (27 percent) continues to be a primary purchase factor when selecting an HPC operating system, capital markets firms ranked price (9 percent), ease of deployment (16 percent) and support of existing third-party applications (15 percent) of similar importance. By comparison, in a similar Microsoft HPC survey released last year, 37 percent of respondents reported performance as the most critical factor, with price and other factors in single digits.
To respond this trend, we have optimized our approach to allow integration at the tools, infrastructure, and business process levels. With Excel Services, Microsoft is giving organizations the ability to do everything from securely sharing spreadsheets to effortlessly creating web-based business intelligence dashboards and portals. In combination with Windows HPC Server 2008, computationally intensive workloads can be seamlessly distributed to compute nodes for unprecedented performance and scalability gains.
PressPass: Aside from HPC, what other solutions will Microsoft demonstrate at the SIFMA conference?
Saint-Amour: Microsoft and its partners will showcase several new technologies in its booth (#2217), including:
Managing risk and compliance – Microsoft and ClusterSeven will demonstrate technologies that help firms balance their governance, risk and regulatory compliance (GRC) obligations with the need for increased revenue and productivity.
Windows Mobile – Windows Mobile gives capital markets firms anytime, anywhere access to stock quotes and other financial information on Web-enabled mobile devices to facilitate real-time decision making and increased productivity.
Unified communications and collaboration – Microsoft partner BT will demonstrate its latest generation trading turrets and how they seamlessly integrate with Microsoft’s Office Communicator Server and Institutional Client Platform.
Real-time trading data in Office Excel 2007 – Microsoft and GigaSpaces show how enterprises can harness the power of the data center to scale Excel-based applications.
Advanced trading with Windows Presentation Foundation (WPF) and Silverlight – Microsoft will showcase trading solutions that demonstrate vivid end-user experiences on the Web that are browser- and platform-independent.
Next Generation Trading Room (NGTR) Framework – Microsoft and Lab49 will demonstrate a fully functional and re-usable architectural framework for trading that seamlessly integrates Excel 2007 and Windows Presentation Foundation for bi-directional communication.
PressPass: Mobility seems to be more popular than ever among businesspeople. How does this factor in the capital markets space?
Saint-Amour: Today’s Wall Street professional needs information anywhere, anytime – even while “on the go.” Mobile solutions allow them to stay on top of market trends, stock quotes and more, while allowing for more face time with customers or partners. Microsoft has one of the more popular platforms on the market – Windows Mobile gives professionals an edge by allowing them to stay connected to critical info and news from virtually anywhere. Windows Mobile-powered devices, along with mobile applications designed specifically for financial services professionals, are the only all-in-one devices that allow Wall Street pros to wirelessly:
Track market activity, indices, and portfolios
Receive custom alerts and access key financial news
Send and receive e-mail in real-time
Manage appointments and maintain up-to-date contact info
View, edit or start a new Word, Excel or PowerPoint doc with Microsoft Office Mobile
Take advantage of convenient touch screen technology, Wi-Fi, memory expansion capabilities and more – standard with many Windows Mobile-powered devices
In fact, during SIFMA, we’ve announced that Bloomberg has selected Windows Mobile to deliver stock quotes, financial news, personalized market monitors and much more to financial services professionals. The broad availability of Bloomberg for Windows Mobile phones extends the all-inclusive Bloomberg Professional service to Windows Mobile phones. Bloomberg users will be able to access economic data, pricing, the latest financial and world news, Bloomberg messaging, alerts, personalized market monitors and other Bloomberg functions from any phone running Windows Mobile 6.