Thursday, February 22, 2018 Stamford, CT USA — Slow and inefficient software deployment processes cost the financial services industry some $1.5 billion annually. Financial service firms could recoup those costs by adopting innovative technology solutions used to deploy software relatively seamlessly in consumer markets.
Those are among the key findings of a new report, Driving Innovation Through Software Deployment, released today by Greenwich Associates. The report finds that the current method for developing and deploying software within large financial services institutions has changed little over the last 20 years, and is archaic when compared to the rapid innovation achieved in software deployment to consumer-focused devices.
Vendors deliver a new software version to financial service companies every 6-12 month on average, a stark contrast to intra-day updates in other industries. Beyond that differential, nearly 70% of financial service firms do not accept every version of software offered to them. This lack of action creates an opportunity cost, as new and impactful features go unused.
“Of course, burdensome regulations and compliance requirements play a part in Wall Street’s slow move toward more modern software deployment, but the lack of improvement and adoption of the latest technology is no longer acceptable,” says Kevin McPartland, Head of Greenwich Associates Market Structure and Technology Research and author of the new report. “It’s not just a question of efficiency. Substandard deployment puts firms at risk to bugs and hacks that can lead to major losses—and even put firms out of business entirely.”
One of the greatest, and perhaps most overlooked, innovations of the past 10 years has been the way mobile operating systems enable software deployment and consumption. Android and iOS, for example, have created a framework that allows third-party development teams to easily build, deploy and update their software applications. And yet in the financial world, the standard processes for software deployment and consumption remain slow and cumbersome. These increasingly outdated practices impose significant costs, including the explicit cost of testing, packaging and deployment; the cost of additional complexity caused by maintaining multiple versions of the software; time-to-market cost for vendors; and the cost of slow innovation for end users.
“The widespread adoption of improved software deployment processes could deliver significant cost and efficiency gains and spur an explosion of institutional fintech innovation that is clearly bubbling below the surface and waiting to emerge,” says Kevin McPartland.