Automation May Require More People
Here's a quick jolt of provocative thought, just in case your brain - like mine - has become a little soft over these summer months: Talk of AI and various other forms of process automation have reached a fever pitch. With that phenomenon comes a flood of new intelligence - and also a heavy dose of mythology. Sometimes the difference between the two is not immediately obvious. The idea that automation has a tendency to kill jobs is [...]
Operational Clues: Asset Managers Shifting Strategies
You can track shifting asset class and/or strategy allocations over several years for a long list of asset managers, and then add it all up to arrive at a data-driven industry trend. Easier said than done. This is an extremely heavy lift without the aid of a database that has already aggregated such information - if at all. But, we think there is another way to generate such a signal that yields a similar conclusion (if you know how to read the tea [...]
Technical Leverage in Context
Alphacution defines technical leverage as the difference between revenue per employee (RPE) and technology spending per employee. In the parlance of our T-Greeks benchmarking framework, this difference is also known as T-Spread. I stumbled over the chart below - 50 companies in the S&P 500 with the highest RPE rankings for 2016 - recently and thought it would be notable to add to the knowledgebase. Since our modeling and analysis currently focuses exclusively on companies related to the [...]
IT Services: A Force Multiplier?
The following is the opening segment from our most recent study - "IT Services and Strategic Impacts for Global Banks: The Force Multiplier" - published via our partner, Aite Group. Learn more about how to access the full report here. Today, outsourced IT services are firmly embedded in all industries and most large corporations. Alphacution’s message to financial sector clients and other buyers of IT services is both blessing and curse: The global IT services sector continues to be [...]
Global Banking Brain Drain Slowing
Brain drain - in this case meaning the loss of valuable human capital - is one of those silent malignancies in an organization that is difficult to measure, and the impacts from which are typically not realized until the damage has already been done. With the global banking sector - and its constituent business segments, from retail banking to wealth management to capital markets - still in the midst of unprecedented and persistent transformation, the risk of ongoing losses [...]
The Dawn of Operational Alpha
They say, it is always darkest before the dawn. They don't say, however, that no one is up and working their asses off before the first light of a new day... By many accounts, the concept of operational alpha has been around for years. I first heard this term in the context of Citadel's launch of its eponymous, mid- and back-office technology externalization effort, Citadel Solutions - later known as Omnium. Citadel even went so far as to [...]
Deconstructing Hewlett Packard: More Clues to Indigenous Productivity
Remember the game show, Name That Tune? (Look it up...) What if I told you that the basic rubric from that game show - naming a song in fewer notes than your opponent - was useful for predicting all kinds facts about trading and other financial businesses. Tell me your trading strategy and AUM, I can tell you how many employees you have. You are an investment bank with 30,000 employees, I can guess your total technology budget. The list of [...]
Nasdaq: Under Virtu Market Data Axe
A quick math assignment: @Nasdaq earned $540 million in information services (aka - #marketdata) revenue in 2016, up 5.5% over 2015 (and, not to put to fine a point on it, but this growth is slowing as 2015 v. 2014 was +8.2%). @KCGHQ spent $148 million on communications and data processing in 2016. @VirtuFinancial is on its way to acquiring KCG - and is on record with a strategy to ultimately consolidate both operations onto a single, unified trading platform. [...]
The Source of #AI Hype
Apple doesn't mention it... Amazon doesn't mention it... Alphabet (aka - Google) does mention it - but doesn't link it specifically to financial performance... IBM? You betcha. More than 155 times... In case you have been living under a rock - which, now that I think of it, has some increasing allure - artificial intelligence (and its slightly less sexy twin, machine learning) has succeeded 2016's marketing darling, blockchain, to become the blinking-neon-sign-outside-your-hotel-room term for 2017. Sorry, folks. The budgets [...]
