Forefront Communications

Markets Media: The Rise of Fintech

Old Mission

Mark Dowd

Mark Dowd

Although the roots of modern financial technology stretch back to the introduction of time-sharing mainframes several decades ago, Wall Street has seen a dramatic fintech revolution in the past ten years.

Technological advancements coupled with after effects of the 2008 credit crisis have enabled new entrepreneurs to create new products and services faster and less expensively than in 2007.

One of the greatest leaps forward for Wall Street, as well as other industry verticals, has been the development and adoption of cloud computing and other hosted infrastructure services.

In 2007, capital market firms could co-locate their technology in someone else’s data center or take advantage of hosted services, but the moniker “cloud” did not exist yet, according to Roche.

“What the capital markets were doing at the time was harnessing computing through grid regimes or high-performance computing farms that were somewhat distant cousins to what cloud has become and is evolving to,” he added.

Before the advent of Amazon’s cloud service and subsequent of similar service like Microsoft Azure, entrepreneurs had two choices, according to Gaer.

“They could spend a lot of money on people, equipment, and data center space, or hope that they had a relationship with a larger bank or institution that already had this kind of infrastructure,” he said. “Either way, you would be placing a good deal of your budget into large and relatively fixed assets. The implications on your balance sheet as well as your lack of ability to quickly change that infrastructure would ultimately slow you down in terms of development and delivery of your product.”

The compression of computing cost has not only allowed firms to develop, sandbox, test, and deploy new applications; it has permitted fintech providers to focus on differentiating their offerings to a much higher degree.

“Fintech has been around in one shape or form since the 70s and 80s, and for most of that time front ends seemed stuck there,” said Peter Maragos, CEO of Dash Financial Technologies. “It’s only been over the last few years that sleek, web-based interfaces the users have grown accustomed to on their consumer apps and devices have been emulated in their institutional platforms, which makes a huge difference regarding usability and overall satisfaction.”

It is almost impossible to overstate the degree to which fintech advancements have helped the institutional investors, he added. “Markets have never been more efficient, and that largely is because new technologies and entrants have either replaced legacy intermediaries, who added unnecessary friction cost or forced those intermediaries to adapt themselves.”

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