Historically best known for its front-office utility in saving traders from ‘swivel-chair’ workflows, having applications seamlessly work together is increasingly valued in the middle office, by the people behind financial firms’ technology.
“Interoperability has been key for enabling business users to streamline workflows and gain efficiency, but the technologists inside the organization face their own set of challenges,” said Dan Schleifer, President and Co-founder at interop.io. “Interoperability is becoming a core piece of architecture that technologists use to streamline and simplify the way that they build, maintain, and eventually retire technology.”
Schleifer noted that many investment managers, hedge funds and brokerage firms need to replace ‘legacy’ technology that might be 20 or 30 years old, but they can’t pull the plug until new technology that fully covers all functionality is up and running. Interoperability enables enterprises to carry on their business while incrementally upgrading technology.
“Firms have to basically build whole new systems – OMS, EMS, CRM, risk analytics – from scratch, in parallel with maintaining the legacy systems,” Schleifer told Markets Media. “Interoperability is being used as a way to bridge the gap between legacy and modern, allowing them to rebuild the technology piece by piece instead of having to do it all at once.”
interop.io, created in June 2023 with the merger of Finsemble and Glue42, recently published an ebook entitled Unlocking Innovation in Financial Services with Interoperability that examines the benefits of interoperability for technologists.
Schleifer said the 24-page PDF aims to fill an informational gap: “There was no clear message to technologists that their success in solving business problems could carry over to solving problems for themselves. We wanted to put together this ebook as a plain-language guide for technologists to better understand what interoperability can do for them.”
The ebook covers four areas: the investments financial services firms make toward technology; the industry problem of hindered innovation, and how interoperability can help solve these problems; and real-world use cases and examples.
Global IT spending in financial services firms was projected to reach $547 billion in 2023, though fewer than half of industry executives reported satisfaction with the results of their technology investments, the ebook noted. Interoperability can break barriers to innovation and boost return on investment by clearing a path from legacy to modern technology, creating a refined and integrated application management strategy, and increasing IT velocity by eliminating duplicate efforts and streamlining development.
Mark Gibbons, Global Head of Information Delivery & Solution Architect at BNY, offered this perspective in the ebook: “Collaborating with interop.io meant we could build the platform on our own global enterprise technology while leveraging interop.io’s user experience. Together, we’re delivering value for clients by freeing up colleagues to focus on higher impact work.”
Another client said that by using interop they will save more than ten person years of development effort as they modernize their technology stack.
“We have clients that have hundreds of applications deployed to thousands of different users in different mixes, across different asset classes, different functions, front, middle and back office, built in a dozen different technologies,” Schleifer said. “Those organizations are held back by that baggage.”
“Interoperability lays out the path for them to rationalize their portfolio of applications, streamline, simplify, and reduce duplication, all to innovate faster – which is really what technologists want to do,” Schleifer continued. “They want to build new, valuable things, and they’re being held back. We want to show them the path that our other clients have taken toward unleashing that innovation.”
Schleifer said overall, interoperability for buy-side, sell-side, and wealth management technologists is in its “middle innings,” with some firms far along and others still early in their journeys.
A bit more than a year after its own transformational merger, interop.io is poised to drive the expansion of interoperability. “It’s been a good merger – we’ve been having a good time bringing the cultures together, and it has allowed us to accelerate the innovation that our clients want,” Schleifer said.
This article was first published on Traders Magazine
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