Financial technology is failing us all.
For decades the financial industry’s business experts have ceded control of their financial systems to technologists.
Business experts spent countless hours teaching technologists the business rules so that their knowledge was encoded in the system.
Even when this process resulted in working systems, the business experts always lost direct control over their technology.
Although a few companies have found efficiencies through automation, most have not reaped the same level of benefits. Their systems require too much manual interaction.
The real problem for financial firms is that they don't control the technology that drives their business. If they had business level control over their technology then they would be able to solve their automation problems.
Costs keep skyrocketing.
The largest firms spend a lot on technology and costs keep rising out of control.
The smallest firms are not even in the arms race, instead they buy packages and connect them with middleware and spreadsheets.
As the number of technologists continued to rise at large firms the number of business experts were reduced to save money.
But as costs continued to rise they were forced to try in-sourcing and outsourcing operations and technology professionals looking for markets with cheaper labor.
Moving the job does not move the decades of accumulated business knowledge that goes with it.
As a result client services suffer, business mistakes increase and costs continue to rise.
This is because the way we build financial technology leaves the firm’s without control.
When you’ve lost control.
You have lost control over your technology when the business cannot easily change/add to the system’s functions or rules.
If you buy your technology you obviously don’t have control.
Building your own system does not guarantee you will have control.
Everything has to be done by committee.
No one person knows where that system feature is or how to make the necessary changes.
The business person doesn’t know how to make the change and the engineer does not know what the change means.
Clearly the problem is that the people who know the business best are unable to make change.
And if the core technologists have left you can forget it all together.
Why does it matter; I’m making money?
In a rising market or one with high returns where everyone is getting rich most will not even realize their technology is a problem.
Money is being made even if technology is causing the business to miss new opportunities.
And at times the decision to act on a particular opportunity will come down to “can the systems we use support the business?" Often the answer is “no.”
If you miss enough opportunities it will eventually catch up with you.
Keeping control of your technology allows you to take advantage of opportunities.
Wished I listened before!
And when the market or returns go down Investors demand a greater level of control and cost cutting.
Most firms can’t cut costs because they lack control over their systems.
In the case of small firms they have bought packages they don’t control. And in the case of large firms they don’t know who has control. Investors become disgruntled and start to focus on fees and expenses.
Investors ask questions like: Why are the fees we pay so high? What are we getting for all the money we are spending? Why are we paying so much for our technology? Wouldn’t it be better to outsource these functions? The list of questions can be exhausting.
Most firms realize too late that not having control over the technology and its cost is dangerous in a down market.
Who’s got control.
The loss of control over technology has been an unintended consequence of how we build our systems.
We build them in a way that leaves the business model and its rules in the hands of technologists.
Only the technologists can read the rules and/or make change. Business experts divulge their knowledge to teams of programmers.
Most teams consist of some number of technologist, GUI programmers, DBA’s and business rule coders.
We end up going through countless iterations of the system. We hurdle millions of dollars in communication gaps and misunderstandings.
And in the past when we got something to work, executives would quickly declare a success leaving the business with 50% of what they actually needed.
Which leads the business right back to spreadsheets and report writers. In the end we are left with systems that only the programmers can control and change. Control has been lost because we continue to make the same mistake.
The cold truth about rules.
Most technologists do not find business rules interesting.
Technologists by nature and schooling are drawn to the newest and best technology.
This is why in countless business discussions we hear how hard it is to get good programmers.
So why do we continue to spend millions of dollars force feeding technologist business rules when the majority don’t care?
And as if forcing rules on them is not bad enough it gets even worse when they leave. Everything the business has taught the technologist is now lost and the business is left with a system they do not control.
How it should be done.
We need to build software in such a way that business experts are responsible for the aspect of the system related to the business and technologists are only responsible for technical issues.
Most would say that this is not possible. But it is, and both business and technologists benefit from this change.
The technologists are responsible for making software accessible for business experts. This is a challenging technical task that they prefer to learning over the business rules.
The business experts would be responsible for the system’s rules and functions.
The business benefits because changes are made faster and with less people.
Because change is less expensive the business will be able to automate more tasks and keep pace when change is needed. The end result is building the kinds of financial systems everyone needs.
What we have already done.
Metaficient™ has built a financial framework we named MetaBooks™.
MetaBooks™ has set of tools like the bFAST™ Modeling Tool that gives business experts the control to create and maintain their financial systems.
There is a certain amount of technical knowledge needed to use bFAST™ but it is no more complicated than working with a large spreadsheet. Business experts have done this for decades.
bFAST™ allows business experts to control all aspects of the business model. For example:
When brokers change their file formats without notice, business experts can change the import routines without the need for a programmer.
When the business wants to trade new products business experts can add the securities and their business rules.
When entering new markets business experts can add new transactions, business rules and supporting GUI’s.
And as an added benefit the business can rest assured they will never be left with a system they cannot control when a technologist decides to leave.
So we know from experience that it is possible to build systems in such a way that business experts can control their technology.
Who we are.
My name is Daniel F. Clune I am the founder and CEO of Metaficient™.
I have used the bFAST™ Modeling Tool to create our Alternative Asset Management System named Prime.
Prime is proof that a business expert can create and control the kind of financial system the business needs at a fraction of the traditional cost.
We are currently looking to work with businesses who want to take back control of their technology and costs.
