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Mortgage Debacle Hits Dev Spending

Securities Industry and Financial Markets Association gathering draws attention to slowing spending in the financial services IT market.

The subprime meltdown that has roiled the financial markets since last fall will negatively impact the amount large investment houses, banks and brokerages will spend on IT overall -- and software development projects in particular -- in the coming years.

That was the assessment at last month's annual Securities Industry and Financial Markets Association (SIFMA) gathering in New York, which drew more than 7,000 IT professionals and developers. Before the subprime mortgage market began to collapse, technology spending among financial services firms was on the upswing.

Bloomberg Launches Windows Mobile App

Customers of Bloomberg LP's real-time market data-long able to receive feeds on their BlackBerry devices -- can now receive them on their Windows Mobile-based devices, thanks to a recently completed development effort.



Bloomberg, a company with customers who tend to be institutional investment firms, announced the development of the Window Mobile effort at last month's Securities Industry and Financial Markets Association Technology Management Conference in New York.

The Bloomberg trading app was developed with Microsoft's .NET Compact Framework using Visual Studio, says John Waanders, a product manager at New York-based Bloomberg who oversaw the development of the mobile app.

"While it's developed with the .NET Compact Framework, it uses the same programming model approach you'd use to build an application running on the .NET Framework for a desktop. It just happens to be best-tuned to the form factor and the needs for a mobile device," says Stevan Vidich, an industry architect in Microsoft's Financial Services group.

The development effort took about six months, says Bloomberg's Waanders. The most challenging part was transforming the navigation model of the desktop to the various mobile devices on which Windows Mobile is offered. For example, some devices are touch-screen based, while others rely on keyboards or other forms of navigation.

There was also the issue of the actual footprint. Desktop users of Bloomberg typically have four monitors showing different applications. "We were much more constrained in terms of the UI," Waanders says. "We had to really focus very heavily on getting only the most important data onto the screen at one time."

Still, the Windows Mobile deployment is in the early phase. Waanders says about 250 people are using the Bloomberg app on Windows Mobile devices, compared with some 40,000 on the BlackBerry. The latter was developed in Java, prior to Research In Motion Ltd. -- supplier of the BlackBerry platform -- developing its .NET toolkit. Consequently, that development work didn't carry over to the Windows Mobile project, Waanders says.

-- J.S.

The reversal in spending is noteworthy because the financial services sector is considered the most aggressive in terms of adopting new technologies, particularly capabilities such as Web services, high-performance computing and service-oriented architectures.

Reversal of Fortune
Prior to the meltdown, overall spending by the largest financial services firms was on pace to increase at a compounded annual growth rate of 8.5 percent over the next three years, rising from $26.3 billion this year to $33.6 billion in 2011, according to Tabb Group LLC, a Westborough, Mass.-based market research firm that tracks IT spending in the financial services sector.

In the wake of current market conditions, Tabb Group now projects that tech spending declined 10 percent last year, is down about 3 percent this year and could rise modestly in 2010.

"It's getting pretty ugly," says CEO Larry Tabb.

Tabb says spending on development is being refocused on projects that can help firms improve their margins, and -- not surprisingly -- do a better job at risk management. As such, investments in capabilities such as algorithmic trading and complex event processing (CEP) are likely to be pivotal in some firms' efforts to become more competitive and improve their ability to mitigate risks.

Better BI
This poses the question to banks -- the now-defunct Bear Stearns, Lehman Brothers Inc., Citigroup Inc. and Merrill Lynch & Co. Inc. -- that have deployed similar risk-management technologies: How did these companies fail to mitigate the risks that have slammed their businesses if their development teams were developing and deploying sophisticated systems?

"There's definitely an awareness that perhaps the systems that existed in place to assess the value of portfolios or judge risk [are being scrutinized]," said Stevan Vidich, an industry architect in Microsoft's Financial Services group, during an interview at the SIFMA event. He added that there's strong interest in CEP and other risk-management methodologies. A growing number of shops have started deploying such solutions based on the .NET Framework, Vidich said -- and he believes such investments will continue.

"Clearly there's a lot of need to deal with the immense influx of data and being able to analyze data in a timely manner," Vidich added. "It also drives need for systems like business intelligence [BI] applied to a near-real-time scenario, which is a very attractive proposition."

Indeed, providers of financial services applications say customers on Wall Street have shown more reluctance to spend on new projects in wake of the market collapse.

"There's a lot more emphasis on ROI, total cost of ownership and savings," says Amnon Raviv, senior director of strategic alliances at data grid provider GigaSpaces Technologies Inc.

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