MBA Jobs: Digital Drive Opens Up New Careers in Financial Services

Drew Hartel
http://www.businessbecause.com/news/mba-careers/2917/mba-jobs-digital-drive-opens-up-new-careers-in-financial-services

Financial services firms are looking to hire more and more technology-oriented people so they can move toward a more digital business model. They are looking to cut costs with this, but Adam Jackson, director at Astbury Marsden said “Investment in IT is no longer being seen as a cost, but as a key to unlocking better long-term profitability for this sector.” As is revealed from this quote, IT is becoming more casual for financial services firms and spending more money on it is now a necessity.

            The world’s largest foreign exchange specialist online, Travelex, recently launched a £25 million digital growth fund and is advertising the jobs that they are offering through a “major recruitment drive” and have many openings in marketing, sales, data analytics and payments. The payments are a big part of their business because they have partnerships with Western Union and Ozforex, which is an Australian online foreign exchange and payments company. Travelex plans to make more partnerships with similar companies and more technology based companies so they can develop new products and services linked to mobile, e-wallets, and location technology. Mobile payments are the future of paying and the e-wallet will eventually replace the old wallet. This is an interesting business tactic for this company and, if successful, will surely put them ahead of their competition. With technology increasing throughout the world drastically, Travelex looking for more information technology specialized people is a very good idea for them.

            BNY Mellon is another financial services firm that is gaining IT presence throughout the world. They recently created a technology lab in Silicon Valley to work on projects such as Digital Pulse, which is how the bank will gather and manage their big data. They are also hiring more IT people and will “ramp up” their recruitment in 2015.

Other banks that have been recruiting more people that are digitally oriented are Bank of Singapore and Credit Suisse. Credit Suisse is starting a “Digital Private Bank” that offers portfolio management and social networking to their clients. An interesting statistic that was mentioned in the article was: “About two-thirds of the world’s high-net-worth individuals expect to manage some of their wealth digitally within five years, according to a 2014 Capgemini SA and Royal Bank of Canada report.” Managing wealth digitally means people are accepting the risk involved when putting their personal money information in the digital world. This will need increased security spending by the banks, especially with the amount of cyber attacks and account hacks that have been going on recently.

The digitalization that is evolving throughout the world is creating opportunities in high frequency trading firms too. These firms are recruiting people from investment banks with technology backgrounds. This makes sense because they use a lot of technology in how they trade and do their job. IT specialists are a necessity to them and this is becoming very present with the amount of jobs that are opening up.

Wall Street: The Right Place for Computer Scientists?

           Recently a group of employees from Goldman Sachs held a panel at Columbia University that was geared toward recruiting engineers straight from college.  Since the financial crisis, there has been a surge of interest in moving away for the old, slow investment bank mindset.  In order for Goldman Sachs to attract the same high caliper computer engineers as Silicon Valley, they must provide as innovative environment as would be found in California.  Engineers for years have taken jobs in Silicon Valley not for the salary benefits but because they know their projects will directly benefit a global market.  Goldman Sachs may be able to entice engineers through salary compensation but if the prospective engineers feel as though money is not their main prerogative Goldman will have issues. 

            Investment banks for decades have been seen as large, slow-to-change entities that are high regulated by the government.  Computer scientists will not take a position where their projects must be regulated and scrutinized by the bureaucrats that populate financial institutions.  Many engineers will speak about Wall Street with a negative connotation arguing that working for financial institutions is a waste of their talents.  Professor Vivek Wadhwa at both Stanford and Duke states, “It breaks my heart when my engineering students use the talents I taught them to engineer the financial system instead of engineering solutions to the world’s problems.”  With this mentality being taught in the top universities around the world, financial institutions such as Goldman Sachs are truly fighting a losing battle. Institutions must find another method of recruiting individuals into the financial sector. 

            Goldman Sachs recently launched their new engineering website that includes streamlined features, modern look, and easy to find examples of why working for Goldman Sachs is a desirable career path in which both parties can grow.   The website is obviously geared toward a younger demographic and very prominently displays a tab that directs the user to awards Goldman has recently received in many fields within the world of trading.  This shows the prospective recruits that the firm is one of, it not the best within the sector.  Awards in 2014 worth mentioning include “Sellside IT Department of the Year” by Financial News and “Most Innovative Investment Bank from North America” by The Banker: Investment Banking Awards.  Goldman Sachs must provide an environment that can challenge these bright young individuals and keep their minds stimulated.  

            Although they have a difficult task ahead of them, Goldman Sachs is in the right position to steal many computer science majors and engineers away from Silicon Valley.  Goldman Sachs must reassure the young employee they will continually be challenged in such a way that will inspire creativity and growth.  I recommend that Goldman Sachs provide an office space in Silicon Valley that provides the same workplace experience as many tech companies.  The annexed division will work at a highly efficient level without having to deal with issues of hierarchy and bureaucracy.  Another possibility Goldman Sachs should explore is the practice of working remotely or the use of satellite offices that can provide a creative work experience for engineers. 

Source: 

http://dealbook.nytimes.com/2014/11/13/goldman-sachs-recasts-its-reputation-to-woo-tech-talent/

http://www.goldmansachs.com/what-we-do/engineering/

http://www.goldmansachs.com/who-we-are/awards/business-awards.html

What's Driving Financial Services? Think Big Data

According to the Article I found on Forbes “What’s Driving Financial Services? Think Big Data”, Big data has been delivering a desperately needed competitive advantage to finance industry that is still struggling after the worldwide financial crises. The competitive advantage that it is stressing to the finance industry is to try and return to profit margins of old. Cost reductions and the traditional business models alone cannot do the job. All banks and financial services firms are turning to big data. They are doing this using specific insights pulled out of daily transactions, market feeds, customer service records, location data as well as click streams to gather a new business model and transform how the services can go to the market. According to a survey, the article claims, that there are four main areas that financial services firms still need to get right. The four areas include: Customer analytics, big data integration, internal data, and strong analytics. According to the article 55 percent of financial industry respondents surveyed that customer centric projects were their top priority, no longer the products. This is why customer data has become the main point in which operations and technology systems revolve around, they have eliminated the works of focus groups. An example of this would be ANZ Banking Group, they are starting a digital assistant that regional bank managers will use to go through every information they have on a client, their own services and updated market trends to make smarter, faster and more personalized recommendations for the wealth management clients. Most financial companies can’t make the most of big data without integrating together systems that can handle the growth in volume, variety and velocity of data and share it throughout their corporation. However the survey shows that just 53 percent of the banking and financial markets companies have integrated information systems. This shows that integration is the clearest way to jump ahead of the competition. Internal data, according to the survey, is said to be the primary source of big data that financial services firms are mining in their new projects. 92 percent are said to be sifting through transaction data while 81 percent are looking at their log data or information that has been logged but not yet analyzed. The survey also reveals that the financial industry is behind with making the most of other data such as analyzing audio data and social data. Strong analytics is big data’s key to helping the financial services industry come back from its set back a few years ago. However the financial services industry is lacking in certain areas of analytics which other industries have been taking advantage of. The analytics capabilities that the financial services firms should be eying in on are social media, streaming, video and voice analytics. According to the article these are crucial for handling the unstructured data that makes up so much of the big data. Overall the point that this article is making is there is no industry that needs to profit more from big data than the financial services industry. Due to their set back a few years ago there is no better way the industry can see potential profit than in big data.

Source:

http://www.forbes.com/sites/ibm/2013/07/31/whats-driving-financial-services-think-big-data/

The Future of Facebook

     On October 28^th Facebook released its FY14 Q3 earnings report, which was followed by an earnings call to investors. The company beat earnings per share and revenue expectations by $0.03 and almost 3% respectively. However, even though Facebook beat analysts’ expectations their share price was down almost 10% in after-hours trading. This sharp decline was due to CEO, Mark Zuckerberg’s, announcement that Facebook was expecting to increase expenses in FY15 by anywhere from 50-70%. The announcement of such a large rise in expenses stems from Zuckerberg’s future plans for the company, and his warning that 2015 would be a “major investment year for the company.”
     Even after Zuckerberg explained his multi-faceted three, five and ten year plan for the future of Facebook some investors became nervous and began to unload their holdings. It’s not surprising to see investors get scared after news like this, Amazon announced a similar plan to increase expenses earlier this year and they have performed less than adequately since then. However, unlike Amazon and other internet giants (e.g. Twitter, LinkedIn, etc.) Zuckerberg seems to be steering Facebook in the right direction even if some investors are skeptic.
     The goal of 2015 is to invest heavily in a plethora of acquired assets that can be developed into streams of future cash flows. The outlook over the next 3 years for the company mainly focuses on improving the quality of currently used features in order to help continue the increasing percentage trend of monthly active users (MAU) and daily active users (DAU). This encompasses mobile app development (which already accounted for 66% of the company’s total revenue), and improvements for 3^rd party advertisers. By improving the way Facebook promotes advertising they will allow companies to target users more specifically and measure their marketing effectiveness. These shorter-term goals will help strengthen the company’s current revenue streams and allow them to focus on other endeavors down the road.
     The next step in Zuckerberg’s plan is his five year outlook. Recently Facebook has been buying a multitude of different companies such as Instagram, WhatsApp, as well as promoting their own domestic products like Search and Newsfeed. Thus far these moves have not helped Facebook’s revenue growth, especially WhatsApp which lost $140 million dollars in 2013 in comparison to its $10 million gains. However, Zuckerberg is not worried about these assets producing revenue in the short-term. Over the next 5 years the company hopes to see continued growth of these applications with a goal of connecting at least 1 billion users. Once each of these applications has amassed their targeted amount of active users, Zuckerberg plans on implementing an aggressive monetizing strategy across all fronts.
     In addition to the future monetization of their acquired offshoot companies, Facebook has even bigger plans for down the road. Within 10 years Zuckerberg hopes that Facebook will be playing a leading role in the development of the next generation of computing platforms. On March 25^th of this year Facebook announced its purchase of Oculus VR and industry leader of virtual technology. This acquisition has positioned Facebook to be at the forefront of implementing augmented reality at a consumer level. These future plans convey the opportunities that Facebook has to become an even larger, more profitable, worldwide internet giant.

http://www.streetinsider.com/Analyst+Comments/Facebook+%28FB%29+PT+Trimmed+at+BofAMerrill+Lynch%3B+Self-Inflicted+Pain+Should+Yield+Long-Term+Benefits/9953343.html

http://seekingalpha.com/article/2627345-update-facebook-q3-earnings-cooler-heads-should-prevail

http://www.businessinsider.com/zuckerbergs-3-5-and-10-year-facebook-plan-2014-10

Advisors Must Prepare for the Investor of Tomorrow

Investment advisors are going to have to change the way they do business if they want to attract the next generation of investors according to the article by Ram Nagappan.  The article discusses how technology is changing the relationship between investors and investment advisors. In the past investors tended to hand over complete control of their investments to their advisors.  They wanted the advisors to make the decisions and then meet with them a couple times a year to discuss their investments.

This relationship worked in the past because the information needed to make these investment decisions was not as readily available as it is today.  Today’s investors are almost opposite of the investors of the past. They are very involved with the day-to-day aspect of their investments because they have access to real-time information about their investments and up-to-date news.  They do not just want to have a couple meetings throughout the year to go over information with their advisors but instead want to frequently communicate with their advisors through different mediums.

In order for investment advisors to stay relevant, the article recommends that they follow a few directions. The first is embracing technology and using it to its fullest potential in order to provide their clients with more tools. Another step is to change the relationship between the advisor and the investor to make the advisor more as the person the investor goes to for advice instead of the person who completes all the transactions.  Advisors should also increase communication with the investors through both the traditional face-to-face communication and also through some digital means such as automatic alerts about investments. Finally, while investors have access to a large collection of news, the advisor should sort through the news so that investors only have to read the most prevalent articles.  According to the article, these steps should help to keep investment advisors relevant in the future.

I agree with the steps this article discusses but I also feel that investors need to realize the value of the advisor.  Like the last step mentions, while investors have access to all the data and news about their investments, most will not have the time or knowledge to digest all that information. An advisor on the other hand will have the past experience to help them make their decisions and will be able to sort through the news article to try and determine which ones may affect the stock price.  Companies like E*TRADE and TradeKing provide news and analysis that are built into their trading platforms to provide customers with up to date information about their investments or potential investments.  E*TRADE also provides training so that its customers can become smarter traders and have some background in order to analyze potential investments.  Investment advisors are going to have to work hard in order to build that relationship of trust with their clients in order to retain their business as these other options become such as E*TRADE become more popular.

http://www.wallstreetandtech.com/asset-management/advisors-must-prepare-for-the-investor-of-tomorrow/a/d-id/1317432 

Google's DoubleClick Debacle

One of the most commonly asked questions about Google’s business model is simple and straightforward: how does Google make money? The answer is just as quick: Google makes its money through online advertising. Namely, allowing other companies to pay to advertise on Google. The strategy is easy to understand. People use the Google search engine by typing in a combination of words to find out information, for example, “restaurants in Baltimore.” A business like Woodberry Kitchen can pay Google to place an advertisement of the restaurant on the search engine when this combination of words is used. Most importantly, Woodberry Kitchen will only pay Google if the advertisement is clicked on, hence the phrase “click to pay.” Google also runs the advertising for other websites, using the same “click to pay” model. Major publishers like Forbes rely on Google to supply ads to their sites.

So what happens when something goes wrong and these advertisements are not there to be clicked on? The publishers lose large sums of money and Google loses credibility. Yesterday, for an hour, 55,000 websites were affected when Google’s subsidiary DoubleClick for Publishers went down. Blank spaces resided where ads should have been on major websites like BuzzFeed, Time and Forbes. The sites themselves were sluggish to load because of the lack of ads; sites like Forbes greet the user with a full page ad, and when it did not load, the website took longer than normal to come up. The Wall Street Journal quotes Brian O’Kelley (CEO of DoubleClick’s major competitor AppNexus) estimate that the issue “cost publishers $1 million per hour in aggregate.” Yesterday’s disruption was the biggest in recent memory for DoubleClick, and people are questioning why it happened and what the repercussions of the event are. Some rivals claim that DoubleClick’s system is no longer equipped to handle the vast amounts of data required to place the right ads at the right time in the right place all in real-time.  The likelihood that this disruption was caused by DoubleClick’s system being unable to handle data is probably inaccurate. The fact that the event did occur, though, is the perfect grounds for DoubleClick rivals to sow seeds of discontent with ad customers currently using this Google subsidiary.

Google has an unquestionably huge lead in digital advertising but other behemoths, like Facebook, are determined to take a piece of the market. Publishers losing a million dollars is not the end of the world by any means; they will be able to recover easily from the lost revenue. What is harder to recover from is this ding to Google’s image. Online advertising companies can capitalize on this small crack in Google’s armor and find a way to break in completely. It is possible that Google’s strong image will protect it, but the unknown is worrisome for its unpredictability when it comes to the reaction of site users and advertisers alike. This could spell the beginning of the end for Google’s reign over digital advertising.

http://blogs.wsj.com/digits/2014/11/12/googles-doubleclick-outage-turns-internet-ad-free-for-over-an-hour/?KEYWORDS=google%27s+doubleclick

Big Data Analytics in Financial Services

     Today financial service firms face more and more regulation.  The reporting landscape is complex and constantly evolving.  Financial institutions are pressured to present increasingly timely, accurate, and comprehensive reports.  Another added complication is that as financial firms move into different sectors than have to comply with different regulations.  Considering the trend of financial instructions merging with each other and expanding this can become a challenge. 

     Big data is everywhere today.  Almost every business can benefit from it; as we saw with the vast amount of uses even sports teams have for it at the presentation last week.  Big data can help businesses perform better, and in this case prove truthfulness to the public.  The way firms have to meet these regulatory requirements is by compiling massive amounts of data.  The issue with this is that systems that many firms have collecting the data.  Companies started collecting this data on legacy systems and as the workload piled up the firms did not update their systems.  The old systems struggle to keep up with the workload; data availability, system functionality, and data integrity are compromised.  Regulations require volume, complexity, governance, and transparency that many legacy systems cannot handle.  Because regulations change so often it is far too costly for firms to continually update the legacy systems to meet the new rules. 

     The solution for these firms is the same as it was for BNY Mellon in their merger.  Although costly and time consuming by overhauling their systems they can not only meet changing regulations but also improve their business.  By upgrading the better big data management and analytics tool, firms can accomplish four things, speed, accuracy, control, and comprehensiveness.  Small nimble servers can be easily upgraded and changed to update the system as a whole.  By compiling all the data from what was in a multitude of places into one place allows the systems to identify potential problems much sooner.  This also adds to the accuracy factor since all the data is in the same spot.  These benefits free up employees to do more productive things with their time.  Not only will employees not need to monitor the systems as closely but they will save an enormous amount of time by not having to go back and fix mistakes that went unnoticed for months since the new system will identify them much sooner, making them much easier to fix.  Having the information combined in one place gives the firm better control over it as well as a comprehensive view of the data. 

     Firms should phase out the legacy system as they implement the new system.  To do this effectively institutions must have a well-planned integration period.  New data management and analytics tool will help financial service firms create a comprehensive view of their trading systems, CRM systems, network and operational logs, decision support systems, etc.  This will provide the firm with the control, accuracy and speed they need to comply with changing regulations as well as opportunities for their businesses to perform better.

http://www.wallstreetandtech.com/data-management/how-big-data-analytics-helps-financial-institutions-navigate-todays-regulatory-maze/a/d-id/1317362?

GitHub for Enterprises

GitHub for Enterprises

            GitHub is a collaborative coding website allowing many users to publically upload their string of code to a database of previously prepared codes. The large amount of data and codes online is currently a huge help for software developers and individual coders since it could possibly cut a good amount of time needed to build full project—assuming the coder is knowledgeable in adapting them and much of the code can be found online. The interesting route Chris Wanstrath, GitHub’s CEO and co-founder, decided to take is to create the “2.0 version” of social coding platform for businesses where companies will be able to host code on their private cloud environments.

            The codes created and uploaded would only be available to the company itself, using hosting services from Amazon’s Web Service unit and along with extras: various security tools, audit logs, and more. Business project developers and coders now have a cloud-based platform to collaborate and write code from virtually anywhere. Rather than emailing codes back and forth around the business from one IT department to another (in the same business), GitHub’s Enterprise updates allow everyone to get involved in the development process in one online spot.

            One of the first ideas that came to mind was the ease of integration through this process. When Dhananjaya Dvivedi, technologist of Shinsei Bank, was in charge of restructuring IT, he could have use GitHub (with the data of today) to make his integration process even easier. When Bank of New York and Mellon was merging, the technology was widely different in that different people were operating different systems. GitHub Enterprise would have allowed easy collaboration through the cloud to see what works and what doesn’t. Software developers could break down functions of each project, upload them to the company’s private cloud, and tag each code with specific names to represent its function. Integration from that point is just pulling what is necessary, and sometimes even adding codes one previously never knew. Synergy can happen in coding as well when two businesses integrate.

            Software development is becoming of growing importance within companies since the Internet has become such a necessity of many of our lives. We can see the Internet transform many business models throughout many industries time over time. Businesses will strive to develop their technology day in and day out because at the end of the day, technology is cheap, efficient and may give one a competitive advantage. And, with that said, we need to further the experience and knowledge of everyone, including employees; so, this is where GitHub plays a role. By upgrading its Enterprise offering to companies, they can protect their codes, build a more efficient coding team, and grow their software IT division, furthering potential growth opportunities within the business. “The goal is to dramatically increase visibility and communication across projects that traditionally may have fallen into corporate silos” (Norton).[1]

Perre Peraj

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[1] http://blogs.wsj.com/digits/2014/11/11/github-collaborative-coding-site-upgrades-enterprise-offering-as-software-development-goes-beyond-it/?mod=ST1

GoPro’s Attempt at Social Media and Content Monetization

     In 2002 (12 years old) GoPro started out as a small consumer electronics company and has since then flourished into one of the most recognizable brands in America. Earlier this year GoPro went through its initial public offering process and first began trading at $24 per share. Currently there stock is trading around the mid 70 dollar range showing a 200% increase since trading began, and reaching a 52 week high of 98 dollars earlier this fall. This sharp increase in stock price stems mainly from the increasing popularity of GoPro products. However, more recently, GoPro has started to explore the possibility of entering the social media market.           
     This endeavor by GoPro is due to their increasingly popular presence online from both their company website and YouTube channel. According to the company there are over 6000 new videos filmed with unique cameras every day and uploaded online by users hoping to become the next “GoPro Star.” This trend has given the company hundreds of hours of free publicity every week, which in turn has helped spread their brand worldwide. In addition to this, since the creation of their YouTube page 4 years ago they have gained over 2 million subscribers, with an additional 521 million views on their website.
     The massive quantity of online video fans has not only helped increase company revenues and brand recognition but has also allowed for GoPro’s transformation into social media. Currently GoPro has yet to set up a social media platform that only promotes company specific content, but they are taking steps in the right direction. As of late GoPro has begun to reward customers with varying dollar amounts when their submitted videos reach a certain views milestone. In addition to that they have started to collaborate with small amounts of users by helping with video editing and quality enhancements that allow global promotion for both the company and the user.
      Even with a shift towards more company controlled video content, GoPro’s increasing online fan-base trend has not faltered. The growing rate of daily uploaded content and views per video has pushed GoPro into the social media spotlight, however there is only one question on investor’s minds. How and when will GoPro start to monetize its online social media presence? With a user base like that of GoPro’s there is tremendous potential for a new revenue channel based off video content monetization. A good example of how publicly made video content can be developed into a new revenue stream is Amazon’s $1.1 billion dollar purchase of twitch, a company that provided users the ability to watch people play video games. The size of this purchase by Amazon can be used to calculate twitch’s value at $20 per user. 
     With a value per user amount like this it is not hard to tell that if GoPro develops a monetization strategy for its video content they could potentially add multi-millions of dollars to its current market capitalization. However, in order for GoPro to continue increasing user growth and expanding its social media presence they need to formulate a monetization strategy that does not turn away the average viewer. If the company can find a happy medium there is a great future opportunity for not only GoPro but investors as well.  

http://www.cnbc.com/id/102152665

http://www.nydailynews.com/news/national/gopro-marketing-turns-top-youtube-brand-article-1.1875573

EMC Doubles Down on the Hybrid Cloud

Last Tuesday, EMC Corporation, a data storage, backup, and security company, announced that they would purchase two start up cloud technology companies, Spanning and Maginatics. They are introducing a new hybrid cloud platform that “which allows corporations to knit together information and applications in their data center with those stored in the public cloud.” This is a big deal for the company because cloud technology is becoming more relevant and is an easier way for big enterprises to manage their data. These acquisitions by EMC also allow them to compete further with bigger businesses such as Google and Amazon. Previously, IBM, NetApp, Microsoft, and other technology companies of the sort were EMC’s main rivals, but now, with the evolution of the cloud, bigger companies such as Google and Amazon are becoming their main rivals in the industry. Although the purchase of the two smaller cloud companies will not get them to the level of bigger companies, it is a good start for the future.

            With this announcement of EMC obtaining the two companies, they also said that they were launching the EMC Enterprise Hybrid Cloud Solution. This allows people who have data stored on the EMC products to combine it with data that is stored on the public cloud.  The purpose of this is that with the public cloud, it is easier to use and faster. With the EMC hardware products, it is slower, but it is much safer and reliable. The integration between the two services will combine the benefits of the public cloud and the EMC products. This new service will use EMC powered cloud service providers such as: VMware’s vCloud Air, Microsoft’s Azure, and other cloud services. It will also use the newly acquired companies.

            As stated earlier, the world of technology is changing and that obviously includes data protection, security, and back up. Companies such as EMC and IBM need to continue to revolutionize the technology world if they want to continue to be successful. Cloud technology is the future and companies need to realize that right away and get a head start on the competition. EMC did just that with the recent acquisitions and the previous acquisition of Cloudscaling in early October. Eventually, something new will come out that is better than the cloud, but for now it is the technology to have for companies in the industry.

Drew Hartel

http://blogs.wsj.com/cio/2014/10/28/emc-doubles-down-on-the-hybrid-cloud/