The fear of disruptors extends to our capital markets world. Many practitioners speak privately of what might happen should one or more of Google’s peers – known collectively as the FAANGs (for Facebook, Amazon, Apple, Netflix and Google) – should turn their attention to the sleepy backwater of global markets. The conclusion seems to be that their scale and ability to deal with massive data sets quickly and easily would put our marketplace to shame – and possibly out of business.
Clearly, the FAANGs, and other giant, cloud-native tech giants of their ilk, are ahead of most capital markets participants in their ability to put data to work for commercial benefit. If you’re looking for proof, just check your phone. It shouldn’t go unnoticed that the whole Big Data thing was sparked by technologies spun out of FAANGs and their peers – specifically, MapReduce and Hadoop. And today, social media networks like LinkedIn are open-sourcing their underlying data platforms for use by others.
The perceived wisdom is that financial services firms – particularly Tier 1 investment banks that have struggled to compete with the electronic liquidity providers (ELPs) and high frequency trading firms (HFTs) at the forefront of high-performance trading technology – are ill-equipped to counter the prospect of an invasion of the capital markets space by the FAANGs.
But it could be that a twist on the concept of high-performance network switches that underpinned the low-latency boom of a decade ago may give rise to hope.
According to Anthony Amicangioli, CEO of HPR (Hyannis Port Research), developer of high-performance networks switches for the trading environment, capital markets firms lack the resources and technologies to make the leap to cloud-based operating environments that could give them the agility to ward off an invasion by the FAANGs.
As more trading-related technology is assimilated into the cloud, firms need to consider their options with respect to integration, availability and access to services. “The technology bar is getting very high,” he says. “It’s hard for financial institutions to operate at this level.”
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