Why is the tech used at banks and funds bad?

I'm not talking about the excel model built by a room full of quants wearing propeller hats, or that algo quietly churning out money in the background until it breaks and loses 2 years of pnl in a millisecond.

I'm talking about the day-to-day tools... Bloomberg is old as shit and IB looks like something your grandmother would use. Symphony is a bit more modern but let's be honest, if you use Symphony you're mid or back office. Everything else is built in excel for trading and powerpoint for sales. I actually saw a dinosaur of an MD oooh and aaah when cloud9 was installed on his computer 5 years ago... mfer that's voip with a button board.

Anyway, what's the oldest dinosaur shit you guys have seen on your desk? There's no vol in the mkts and I'm bored out of my skull.......

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Comments (17)

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Aug 26, 2020 - 8:10am

Because most people were educated and trained using those tools. No one cares about how the UI looks, most people care about getting to the right information in the least amount of time. 

Another thing is data quality assurance. These pipelines are checked every day and even regulated by the OCC, and any data that can impact pricing and PnL of the bank or its clients has to be of impeccable quality. This is why there won't be a new competitor to GS MS JPM etc.

The systems they use (80% built in house) are just so robust and regulated you could spend decades trying to build everything again from the ground up. These firms even have their own versions of libraries for coding that are penetration and security tested...everything new he to be 100% safe and this is a huge burden to adding something to the tech stack in production.

  • Prospect in S&T - Comm
Aug 26, 2020 - 9:45am

What do you mean by bad? All you said in your post is "old". Are they difficult to use? Inefficient?

Aug 26, 2020 - 12:08pm

This isn't just a problem for finance firms but also for a lot of F500 companies in general. Many places have outdated tech + internal/external systems largely because of their "if it ain't broke don't fix it" mentality and to upgrade one thing means to upgrade a hundred other things. Typically corporate IT projects that want to fix some of the old programs take such a long period of time to successfully execute/transition especially if the company has global offices. You'd be surprised at how much inefficiency occurs because of it. 

Aug 26, 2020 - 12:47pm

it costs millions (in some cases, tens of millions) of dollars, and years of developer time, to build that software...and would cost millions more to upgrade it.  If it gets the job done in an "efficient enough" manner, why bother upgrading just for the sake of upgrading?

Aug 26, 2020 - 9:21pm

depends on fund..

most of fund still make money with bad tech. do keep in mind long short fund perform much than quant fund this year.

many quant funds liquidated this year because big bubble of quant fund gonna blow up in next several years. only top 5 will survive and do well

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Aug 27, 2020 - 8:07am

BBG and MS office are modern as hell compared to some of the internal systems for derivative valuation, trade booking, etc at banks. I think it's largely a function of inertia: when your firm is making live markets all the time, there is little tolerance for any kind of minor interruption for the implementation and more importantly learning of new systems. So years, even decades go by without major changes/improvements to archaic "proprietary" software

Aug 27, 2020 - 12:16pm

Building on top of legacy systems, which is somewhat unavoidable. This is why infrastructural SaaS is so highly valued. One someone starts building tech on top of your tech or customizing your tech to their needs, then they are stuck with the platform to a large extent.

Also regulations make everything a nightmare. GF works in credit for a large "modern" bank and some of the stuff they use is hilariously old school but I get why. Security requirements + others regs make it really hard for startups to build.

  • 4
Aug 27, 2020 - 1:27pm

It's like buying an old house - start opening up the walls, you never know what's in there. Same thing applies when trying to upgrade from legacy systems and/or implement new ones. The heart has to keep beating - in most cases, it's vastly easier to deal with. 

I would add onto your regulation piece that as AM firms grow the number of non-revenue investments that have to be made are rising about as fast as fees are coming down. Which, to say, is not a good thing. You have to grow compliance, technology, security (god knows these are now rising) and while, sure, some of that is just needed as you grow there seems to be no end in sight. 

The other thing that is challenging is this creep of fancy retail UI platforms into the institutional space. It's not enough to have a static performance report - you need to access it digitally, manipulate charts, etc. That costs money and, frankly, you aren't charging any more to compensate. Why the big get bigger through M&A and the small stay as niche as possible. 

Aug 28, 2020 - 10:06am

I remember when i was interning at 3M in undergrad. One of their big initiative was switch email applications to MS Outlook from Lotus Note (legacy IBM email product). That was a years long process in the making and cost tens of millions of dollars. It's pretty hard to just up and change especially for a corporation of any size. That's why lots of firms use old product. The cost of switching just isn't worth it in most cases. 

Aug 28, 2020 - 6:41pm

Enterprise tech sales guy here. Pretty sure I've seen it all. To start it costs millions of dollars, 12-18 months, and even longer for everyone to relearn the systems so it has to be worthwhile -- so to even think about it there has to be a compelling reason, not just "it has a better UI". This is assuming a company wide system, not some accounts payable app some director bought. 

Common reasons:

1. They just don't care. If it works it works, especially back office systems where it doesn't really matter if you save a little efficiency. Common with older companies. 

2. It's a giant pain in the ass. Data has to be migrated, usually teams of consultants have to come in, not to mention possible interruption of money making activities. No one wants to deal with it. 

3. Stuff is built on top of it. Can't get rid of a old database because its used for example .

4. All the new stuff is too new. If a company goes out of business or the systems end up failing you're fucked, so you are better off just keeping the older stuff until something else comes along. 

Array
  • 3
Dec 30, 2020 - 10:29pm

I'm not discussing the dominate model worked by a room brimming with quants wearing propeller caps, or that algo discreetly producing cash out of sight until it breaks and loses 2 years of pnl in a millisecond. 

I'm discussing the everyday instruments... Bloomberg is old as crap and IB looks like something your grandma would utilize. Orchestra is a smidgen more present day yet let's face it, in the event that you use Symphony you're mid or back office. All the other things is worked in dominate for exchanging and powerpoint for deals. I really observed a dinosaur of a MD oooh and aaah when cloud9 was introduced on his PC 5 years back... mfer that is voip with a catch board. 

  • Intern in Consulting
Dec 31, 2020 - 4:42pm

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