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Welcome Back to 2006: Top #InvestmentBanking Headcount Roundtrip

Well, it would have been the Top 10 investment banks, but @Barclays doesn't publish quarterly headcount for some reason. Maybe they will help us fix that. Anyway, for the Top 9 investment banks, total headcount is down 13% from its peak in Q3 2011. And, with at least 2 of the 9 - @Deutsche Bank and @CreditSuisse - reporting significant headcount reductions for the road ahead as part their year-end 2016 financial releases and 2017 guidance, it's not much of a stretch for us to predict that the Wonkavator is highly likely to travel further back in time than year-end 2006 (see below). I just want to let this picture dangle for a bit without much comment. We will be revisiting and significantly expanding this analysis in the weeks and months ahead as we roll into the development of our 2nd Annual Global Bank Technology Spending study. Stay tuned...

By |2020-10-05T21:13:02-04:00March 2nd, 2017|Open|
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Dodd-Frank in Douchebagistan (During the Age of Radical Innovation)

Here's an Inauguration Day rant for you: They hadn't even finished counting the ballots for the new POTUS when, on November 10, 2016, one of the great poster-children for modern-day douchebaggery, Alan Greenspan (@realGREENSPAN)  said to CNBC "I'd love to see Dodd-Frank disappear; a "disastrous mistake." Hasn't this guy figured out that he is way past his sell-by date? Anyway, just bookmark the timing of that statement while I set up today's metaphor: Roll back the clock a few decades to the early 1980's - height of the Reagan days - when those in the halls of power concluded that they could sell increasing levels of consumption to more of the masses (the "American Dream) by helping them lever their assets. The federal government played the game, too - of course. This was the real-life birth of the Avengers Initiative. Collectively, we The People, asked (or allowed) our representatives in capitol buildings across the land to help make it easier for banks to engage in financial engineering so that people on Main St. could consume more fancy stuff with [...]

By |2020-10-05T21:12:38-04:00January 20th, 2017|Open|
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Ding-a-L-ING Group’s Deconstruction

On Monday, 3 October, ING Group - formerly the Netherlands' largest lender and one of the world's largest financial conglomerates - announced plans to cut 7,000 jobs from its ranks of about 52,000 in order to invest in digital platforms that are expected to generate annual savings of 900 million euros ($1 billion) by 2021. Beyond this, what is fascinating about ING is the rare glimpse it gives us into the post-global financial crisis (GFC) dismantling of one of the world's financial behemoths. We have few other case studies - although, oddly enough, ABN Amro does come to mind - where we see the persistent "reverse-conglomeration" of a large and global financial services powerhouse. As a stipulation of the Dutch state-funded capital infusion in the wake of the events surrounding the GFC in 2008-2009, ING Group was essentially forced to sell off numerous businesses in order to maintain or exceed minimum capital ratios. The chart below details the timeline and more than 50 divestitures that have occurred since the GFC. Here [...]

By |2020-10-05T21:09:31-04:00October 4th, 2016|Open|
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Navigational FinTelligence: The Method and the Madness

This post includes a metaphor, an anecdote and a vision.  Ready?  Here's the sketch: A magician - who was prone to playing the "long ball" - sought to develop the world's greatest card trick. True to form, the magician asks a volunteer to pick a card, sign his name to it, and put it back in the deck. The magician then claims to transport that card into a tree. When the tree was cut down immediately thereafter, the autographed playing card was found, encased in glass, nestled within the heart of the trunk. A weary traveler - and avid puzzle-builder - walks into the Louvre gift shop in 2002 and purchases one of the world's largest jigsaw puzzles. It was 8,000 pieces, when assembled, depicting an elaborate fresco created by Luca Giordano during the Habsburg Dynasty (known as "trigolo degli Asburgo"). The puzzle sat in its box until 2007 when - over the course of the next year - the puzzle was assembled on two adjoining sheets of 4' by 8' [...]

By |2020-10-05T21:09:08-04:00September 23rd, 2016|Open|
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Can (Digital) Transformation Be Measured?

A sextant is an optical navigation device used by sailors starting around 1730. With practice, it can prove quite accurate in plotting courses. Though the contemporary digital equivalent - a global positioning system (GPS) - has become the mainstream tool for navigation, sextants are still in use today among a small but avid group of yachtsman, survivalists and cognoscenti. Keep this migration in mind as we walk through today's question: Can (digital) transformation be measured? Our answer to this, of course, is yes - however, as in most cases, the specificity of measurement is data dependent. So, the qualified "yes" to this question, for now, relates to measuring transformation at the enterprise level. This is because the necessary enterprise data is relatively easy to find in the financial disclosures of the companies in our initial target sample. There is also rhyme and reason to starting at enterprise level because it plays squarely into our long term vision to define the total value of technology spending in the financial services ecosystem - [...]

By |2020-10-05T21:08:42-04:00September 20th, 2016|Open|
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Bank Technology Rant: You are Noah, This is the Flood…

Do you recognize this guy above? That's right. He's Captain Obvious! Captain Obvious is the guy who preaches to the choir; tells Noah about the flood... Get it?  Good. Let's move on. Here's the translation for today's rant: "Noah" is a Top 10 investment bank, the "flood" in this case is McKinsey & Company, or - I suspect - any of the other global management consulting powerhouses. Today, I "learned" from both Financial Times and Business Insider the following (from the BI article, my emphasis added): "How are bank executives to cut costs? McKinsey's answer is technology...because technology seems to be part of the answer to every question these days." Now, just let the sweet wisdom of that pearl roll around in your gourd for a minute. If you're anything like I was earlier, you are now having a reaction like the one below (annotation not mine). I know, right?! Mesmerizing stuff. Thank me later for sharing the epiphany. Not SEEMS. IS! Technology IS a part of every solution these days, along with [...]

By |2020-10-05T21:08:32-04:00September 16th, 2016|Open|
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Back to the Front: Post-Trade Processing Getting Sexy-er

If you happen to hear the drumbeat of these things called "operational analytics" getting louder, then you just may be dialed in to the subtle downstream impacts of some of today's most common headlines related to financial enterprise transformation. For instance, the fintech revolution we are living through - with all its new-fangled and often overly-hyped gadgetry - is really about harnessing the opportunity for unprecedented process efficiencies. But, while it is a soothing distraction to daydream about deploying new digital tools during the ongoing regulatory hurricane, the economic impact that they will have on the FSI landscape is barely going to move the needle anytime soon. Of course, there are exceptions to this broad brush stroke: The impact of evolving IT infrastructure solutions from Infrastructure-as-a-Service (IaaS) to software defined networks (SDNs) to any number of other high-performance compute and storage tools are already sufficiently mature to be making a major impact on architectures and technology buying patterns. A similar statement could be made about open source big data tools such [...]

By |2020-10-05T21:08:22-04:00September 14th, 2016|Open|
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#ResearchTools or Research ‘Tools’?

I have been holding on to this rant since Friday (unfortunately) - so here it is for your Monday morning coffee or commute enjoyment... Scenario: Surfing my Twitter feed and I stumble over a new piece of research (from a well-known group) which is being distributed and promoted by a well-known, bulge-bracket tech firm. The headline "hook" language is compelling.  It reads something like: "The essential ingredients for digital transformation" yada, yada.  So, I bite - recognizing the players and interested in what they have to say. I crack open the attached report and what I find there is maybe half a whiff less than pure and total bullshit.  10 pages, 1 word-filled diagram, entirely sanitized of anything close to resembling a number. Clearly, this scenario is the brainchild of an incumbent tech vendor's marketing team. I have witnessed - and participated in (and been complicit in even!) - dozens and dozens of these projects whose template was gleefully lifted out of the seemingly ubiquitous and cobweb-encrusted playbook entitled "Best Ways [...]

By |2020-10-05T21:08:10-04:00July 25th, 2016|Open|
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#PassingTheBuck: Deutsche Bank / Hewlett-Packard Enterprise Case Study (Part II)

Part I of this post can be found here Here’s the central question: After one year, does Hewlett-Packard Enterprise deliver tech savings for Deutsche Bank? (And, is this a harbinger or a template for other large banks and market participants?) With the Annual Report and other financial disclosures released on March 11, 2016, Deutsche Bank (DB) has completed its 2015 reporting. Our original curiosity here was to determine if a technology outsourcing alliance between Hewlett Packard Enterprise (HPE) and DB – which was announced about a year ago in late February 2015 – has resulted in any observable impact on the technology spending patterns at DB. With a fully updated model in hand, the results provide some strong signals – and some additional curiosities. Here’s what we find: First, estimated year-over-year spending on hardware and infrastructure – a component of TCO where HPE is expected to have the most impact – is down $405 million 2015 vs. 2014, which represents an 8% improvement during the period – and is about [...]

By |2020-10-05T21:05:28-04:00March 16th, 2016|Open|
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#DigitalDisruption: Process Replacement vs. Process Re-engineering

Behold! The first Alphacution video, with our good friend Jim Jockle, Chief Marketing Officer, Numerix. Before you move on to the video, I wanted to add a few comments: In this segment, I emphasize that one of the key challenges faced by large financial organizations - primarily thinking of the largest global banks, since this has been where we have focused much of our analysis and modeling of late - is process refinement or process re-engineering; that the innovation that these banks are most challenged with is more process oriented. The point here is in response to the first question of the following video: Digital Transformation needs to be clearly distinguished from typical, run-of-the-mill change management. Digital transformation involves radical change. Digital transformation is NOT about process refinement, process re-engineering, or a common change management exercise. Digital transformation involves process replacement.

By |2020-10-14T21:58:06-04:00March 8th, 2016|Open|
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