The derivatives landscape has evolved greatly over the past few years, driven by the scale and pace of regulatory change, economic unease and competitive pressures. These drivers have heightened the attention on risk technology and operations, forcing firms to re-think their business operating models.
Increased complexity and uncertainty have motivated forward-looking firms to avoid stop-gap measures and embrace modern technology. There is evidence that, managed properly, a holistic approach to risk management pays off. In contrast, maintaining multiple systems is complex and can be costly and often inadequate. The rapid pace of innovation in technology presents a whole new range of possibilities for how technology can be leveraged in financial markets. Firms that make good choices and manage their technology will be in a significantly better position in terms of operating costs, and their ability to measure and manage risk more efficiently and effectively.
With the traditional segmented approach to risk management no longer suitable, the application of integrated risk management is fast becoming best practice. Risk technology is undergoing its next wave of innovation with a new breed of single integrated solutions. With a focus on reducing costs and a desire to consolidate positions in as few systems as possible, firms are moving towards a more balanced, business aligned, and risk based strategy. In an ideal setting, end-users are favouring trading, portfolio management, risk, and analytics contained within a single platform. Technology providers that offer a single, extensible platform are becoming increasingly desirable.
There has been a great deal of talk about the need for capital markets to invest in technology. Leveraging better technology can increase flexibility, improve performance, reduces operational risk, and lower costs. Firms want to minimise the number of different technologies that are in play, aiming to lower costs and improve resiliency. They want to be able to upgrade functionality with minimal operational or organisational interruption to their daily workflow and avoid punitive project costs for what is sometimes limited added value.
So how can firms construct scalable, next-generation technology building blocks to respond to the challenges of today and be flexible enough to adapt to the world of tomorrow? In today’s innovation environment, large global enterprises have completely rethought how they build and deliver software, using bleeding-edge technology. This new-age design philosophy is called microservices, a direction that fundamentally reshapes the structure of risk technology.
