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IBM Financial Framework: Where's the Innovation?

IBM has announced a new Financial Markets Framework that it says is "designed to serve as a springboard for transformation so clients can focus their efforts on growth and innovation." At its core: "speed and transparency to achieve new levels of collaboration, business insight, and smarter decision making," according to a spokesperson for Big Blue.

Several components squarely target the financial sector: there's an algorithmic trading program that speeds automated trading and reduces risks; capabilities to consolidate similar securities processes (to help cut operating costs); and a settlement risk-management feature that measures and watches over the risk from unsettled trades. Other components target increasing data volumes and the need to process transactions faster.

The Financial Markets Framework is a technology platform based on open standards that employ "ultra-low latency features with advanced information management, analytics, and process integration software," IBM says. Processing speed is always welcome, of course. The framework is designed to "simplify integration, improve interoperability, and enable the delivery of innovative customer-centric services" and combines IBM software such as WebSphere, Lotus, and Information Management products with server and storage products, and ,understandably, consulting services.

Innovation was repeatedly emphasized in the announcement. Big Blue points to a report by analyst firm Celent that says financial services firms have increased their reliance on technology to drive innovation and streamline operations -- as well as the more mundane reliability improvements and regulatory compliance.

IBM says it will soon release survey results of CIOs in financial service firms that show they expect to spend 20 to 30 percent of their budget on "transformation projects" (that is, innovation). IBM says "the laws of the IT budget calls for only 10 percent of the budget to be put towards innovation." Increased spending on innovation is good news, especially given the tough economy, but the Financial Markets Framework doesn't have much to show for itself -- at least not yet.

In citing examples of innovation, IBM pointed to Bolsa de Comercio de Santiago, the central stock exchange of Chile, which is using the IBM framework to meet regulatory requirements and improve performance. That isn't innovation.

The exchange's general manager says, "In addition to basing our new securities trading platform on IBM offerings, we are using the IBM Financial Markets Framework to guide our entry into trade surveillance and monitoring. We are performing specific correlation analysis on trades to watch for regulatory violations." This is new? Doesn't sound like it to me.

Chi-Tech, which provides exchanges with trading services, is also cited in the release as incorporating IBM middleware "into our platform, to meet their requirements and our high standards for speed and mission-critical reliability,” according to the vice chairman of the company, Gregory E. Smith. Sorry, but this doesn't sound like innovation either. It's more like keeping up with your competitors.

Heaven knows that financial firms are under increasing pressure to ensure fast and secure processing, but when announcing products that are designed to support innovation, it takes more than promises to get me to part with my money. IBM has to do more than provide examples of companies simply keeping their firms on an even footing with increasingly tough competition.

-- James E. Powell
Editorial Director, ESJ

Posted by Jim Powell on 06/23/2010

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