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Integration Integral to Innovation
Goldman tops a bulge-bracket who's who in our survey of technology providers
October 17, 2007
The most innovative users and deployers of technology in the securities industry, and not just because they have the most money to spend are among its largest firms, according to leading technology suppliers. They consistently view technology as an integral part of their business strategies, and they share similar approaches. When they aren't building solutions in-house, they're working closely with vendors to develop and integrate new hardware and software into their technology infrastructure.
For this part of the Securities Technology Ranking, Framingham, Mass.-based Financial Insights asked vendors which Wall Street firms they see as the most innovative users of technology. They were allowed to cite up to three firms, and 72 participants cast a total of 145 votes; 71 firms were named. Goldman Sachs Group captured the top spot, with 22 votes. Citigroup, UBS, JP Morgan Chase & Co. and Credit Suisse followed with 14, 13, 12 and 10 votes, respectively.
The vendors were asked to provide reasons for their selections. Some of those who chose Goldman Sachs cited its efforts to automate processes across the firm, or its use of technology to capture market share--among the goals of most large Wall Street firms. Others were more specific, such as the vendor who suggested Goldman is willing to invest in technology even before it becomes a competitive necessity.
Randy Cowen, Goldman's chief information officer, said in an interview that his firm's technologists are always talking to vendors as well as venture capitalists and clients about new directions. "We're definitely listening for developments in the vendor community, especially at the smaller companies," Cowen said.
Weighing In Early
Many votes likely went to Goldman because of the tight relationship--on both a business level and in hammering out technical details--the firm seeks to maintain with its vendors. Even the largest technology companies such as Microsoft Corp. and Cisco Systems assign senior executives to collaborate with Goldman staff on strategy.
Goldman technology executives convey to vendors the firm's specific needs, noting early on in the development phase how the technology could work better for them. "We're able to advocate for innovations the vendor makes," Cowen said. "It helps us adopt the technology a little earlier than others, because we were a part of the discussion on how to develop it." He described technology as "absolutely core to how we innovate, bring value to customers and build out our businesses."
Other highly ranked firms expressed similar views. "When customers choose us to provide products and services for them, the quality of the technology we offer is a significant factor in their decision," said Steve Randich, chief information officer of Citigroup's markets and banking division.
Randich noted that for cutting-edge financial products and services, such as trading algorithms, bulge-bracket firms tend to develop much of the supporting technology in-house. Like Goldman, Citigroup works closely with vendors during the development stage. "Our core commercial banking product was developed inside a long-standing relationship with a software vendor, which then sold that software to other clients," he said.
Much of Citigroup's innovation stems from its integration of the latest technologies into its infrastructure, according to Randich. For example, hardware devices have recently emerged that can more effectively compress and accelerate network traffic. Citigroup has worked with vendors to plug those devices into its network to speed up performance. "It's Citigroup's technology infrastructure, and we're using vendors' products to improve it," Randich said.