Research & Thoughts

Treasury and Trading Applications - Are They “the Last Untouchables”?

Capco Managed Services

Technology beneath treasury and trading platforms has long been regarded by internal departments as “untouchable”. Presented to the business as too complex, too bespoke, and too high risk even to consider external support, it has successfully relied on “not invented here”. But this traditional mantra is now being challenged, largely as the result of an economic wake-up call.

What does it take to change the treasury and trading platform from a client-delivery support model to an outsourced solution? The institution has to want to change! This rewording of an old joke contains a large degree of cultural truth about the traditional resistance to “outside intervention” in this key area. Treasury and trading applications are central to the integrity and effectiveness of the trading supply chain. It is perhaps not surprising therefore that, historically, they have been closely guarded by internal departments, with deep-seated resistance to outside “interference”.

A Gartner survey (carried out in June, 20101) suggested that banks and investment firms using treasury and trading platforms prefer, by a wide margin, the on-premises, client-delivery support model. This preference reflects their desire for ownership and for an ability to exercise control over platform usage; along with a lack of appetite for the projected risks of employing an outsourced solution. The desire for, perceived, tight control and a culture of “must be invented here” have had the direct and undesirable effect of driving up total cost of ownership — TCO — of an application.

Rising TCO evidently runs counter to the demands of the prevailing economic climate, which has promoted uptake of consolidation, upgrades and extensions as a route to minimizing costs. Financial institutions, and vendors, are now being driven to support initiatives that attack the costs of support and maintenance, while adding the value that organizations seek.