Paul

About Paul Rowady

Paul Rowady is the Director of Research for Alphacution Research Conservatory, a research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas. Contact: feedback@alphacution.com; Follow: @alphacution.

Defining #Transformation within Financial Services | Numerix Video Blog Series

Understanding FinTech #Transformation: In this FIRST of a five part video blog series, Jim Jockle, CMO of Numerix sits down with Paul Rowady, Director of Research at Alphacution to discuss the concept of #Transformation. Jim and Paul provide their perspectives on the latest examples of transformation they’re observing in the financial services industry specifically around the cross section of IT spending trends, software vs hardware investment, human capital expense, IT infrastructure, data management and risk analytics innovations. The five segments cover: Defining #Transformation within Financial Services Quantifying #Transformation The Cost of #Transformation #Transformation and TCO: Hewlett Packard Enterprise & Deutsche Bank Case Study Investing in #Transformation: What’s the ROI? Video 1: Defining #Transformation within Financial Services Jim: Hi welcome to the Numerix Video Blog I’m your host Jim Jockle. Joining me today Paul Rowady, director of research at Alphacution. Paul, thank you for joining us. Paul: Good to be here Jim. Jim: Continuing our conversation on transformation a word that’s tossed around a lot, as an analyst, why don’t you [...]

By |2020-10-14T21:57:35-04:00April 19th, 2016|Video|
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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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#PassingTheBuck: DB-HPE Tech Outsourcing Deal, 1-Year Anniversary

Squeezing more performance from less costly technology footprints is a perpetual imperative for all businesses in the digital age. Unlike the latest – and ongoing – turbulence on the surface of the global markets seas, something slower, somewhat mysterious and much more evolutionary is going on down in the deep. One might argue that the largest global banks head the list of those businesses that are among the most in need of “more-for-less” transformation. As a result, monitoring the impact of events such as the Deutsche Bank – Hewlett Packard Enterprises information technology outsourcing (ITO) deal is of such importance. Alphacution has developed a detailed and quantitative case study to illustrate the bank- and business division-specific - impacts of this arrangement as well as the implications for improved monitoring of the transformations of other large entities in the financial services industry (FSI) ecosystem. First, some quick background:  On February 24, 2015, Deutsche Bank (DB) and Hewlett-Packard (since re-configured as Hewlett Packard Enterprises – or HPE) announced a 10-year,”multibillion dollar” agreement [...]

By |2020-10-05T21:05:12-04:00March 2nd, 2016|Open|
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#CrowdedOut: Banks’ Technology Spending Paradox

They really don’t have a choice here. And yet, in this “everything is customizable and personalize-able” world in which we now live, we have grown to expect that there is always an infinite spectrum of choices available. Not so much when it comes to banks’ spending on technical infrastructure. It turns out that internally-developed software costs (which we believe includes both proprietary and consultant-developed software) are the fastest growing component of our technology total cost of ownership (TCO) framework, which includes hardware, software, data and human capital. Of the 50+ large global banks that we have modeled so far, most of them throw off a similar picture as the one in the sample exhibit below of a large APAC bank. Here the accumulated net carry value of software is being driven almost exclusively by spending on internally-generated software – and far outstripping the growth in spending on computer hardware / equipment. Furthermore, it doesn’t matter if the bank is in the Americas, Europe, Asia or anywhere in between. Most of [...]

By |2020-10-05T21:05:04-04:00February 11th, 2016|Open|
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By |2020-12-24T18:20:43-05:00January 1st, 2016|Open|
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Yellen and Me: The Catalyst Behind the Rate Decision

< This is a test. This station is conducting a test of the Emergency Broadcast System. This is only a test.> I had been in this room before. It was the early post-Dodd Frank days. Maybe February 2012. I had authored a study on the impacts of new regulations on collateral and initial margin requirements for OTC derivatives (OTCDs). The study had been commissioned and was being promoted by the World Federation of Exchanges (WFE). Largely as a result of my global initial margin estimate of US$ 2 trillion for OTCDs, it had made a big splash. On the back of this, the event invites and media came knocking. My friend, John McPartland – “McP” to those who knew him longer than 15 minutes – invited me to present at a monthly luncheon for Chicago financial muckety-mucks. Now, it was good to be back. For this night’s event - set at the corner of LaSalle and Jackson in the main gathering space on the 2nd floor of the Chicago Fed [...]

By |2020-10-05T21:04:55-04:00December 15th, 2015|Open|
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#DigitalMythology: The Searing Truth of Context

The primary goals of this ongoing series of research are to quantify - in increasing detail - what the members of the financial services industry (FSI) ecosystem spend on technology (including hardware, software, data and IT human capital) – which is sometimes referred to as (enterprise) total cost of ownership (TCO); develop benchmarks and analytics that help describe the absolute and relative nature of these spending patterns; and then, use the findings to confirm, deny, expand the prevailing (or introduce new) narratives in the space. The first phase of modeling has focused on the largest IT solution buyers, a selection of over 50 of the world’s largest banks – plus a few others whose purpose, for now, is to help us place this initial sample of FSI players in proper context. (More on this shortly.) Subsequent phases of modeling will incrementally build upon this foundation with the addition of other constituencies in the FSI ecosystem until a comprehensive view is maximized. With this as a backdrop, we have been focusing on [...]

By |2020-10-05T21:04:45-04:00December 6th, 2015|Open|
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#DigitalFrontier: Guiding Lights for the Analog Galaxy

Before everyone heads off to worship at the Altar of Tryptophan for a few days, I wanted to share some updated analysis: (I promise to keep it as short as possible, but unfortunately no less dense than usual.) In a recent post, #Technical Leverage: Can You Defy Your Scale?, I added Google’s (and Virtu Financial’s) RPE (revenue per employee) analytics to our core assembly of the 51 largest global banks. Given Google’s stand-out RPE of US$ 1.23 million (2014), I developed a hypothesis that this was a common theme among similar Dot.com / Internet-related leaders; that perhaps there was a pattern that would help us better describe and understand the nature of the digital revolution. Before we go to the visual, it is often the case in the search for meaning in new mega-drivers that there is a refinement of language and labeling exercise that needs to take place. After all, if we are too cavalier about the definition of new mega-drivers – if “digital” is in fact new at [...]

By |2020-10-05T21:04:38-04:00November 24th, 2015|Open|
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#TechnicalVirtuosity: The Player is the Special Sauce

Once upon a time, a few clicks back into my youth from now, I fancied myself a fairly decent piano player. That illusion came to an abrupt demise when I met Fred Johnson. On the surface, Fred was as milquetoast-Midwestern as they come. You might have expected hay to fly out of his mouth when he spoke. But, that assessment would have been seriously flawed, as I soon learned. It turns outs that Fred was blessed with perfect pitch, had any number of the very long and complex Rachmaninoff and Prokofiev concertos perfectly lodged in memory, and the speed of someone afflicted with the gift of 25 fingers – and all by the 9th grade. He was a quintessential virtuoso as far as I was concerned. What Fred produced at the same piano and with a quick glance at the same sheet music as I had been laboring over for weeks were two entirely different definitions of music. In short, I would need to discover my own virtuosity away from [...]

By |2020-10-05T21:04:29-04:00November 19th, 2015|Open|
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