IT in finance: What was hot and what was not in 2010?

After something of a difficult 2009 for investment banking techies, this year has seen a dramatic reversal of fortunes. Here's our considered opinion on the highs and lows of 2010.

2010 has been a good year for...

General employment prospects for techies

OK, so this is (uncharacteristically) vague, but it's worth pointing out that 2010 has been a very good year generally for techies working within investment banks.

Goldman Sachs revealed that 25% of its new recruits this year have been within IT, Credit Suisse said it had added 900 staff in the second quarter alone - largely in technology, while JP Morgan, Citi and Morgan Stanley highlighted how much they've been spending in this area.

While much of this recruitment took place in the first half of the year, it's only recently that recruiters have reported a slowdown, as banks take stock of their new hires and plan for 2011.

Pay

Base pay for techies within investment banks has never come close to their front office colleagues, but this year has seen some rather tasty salary hikes.

By July, 90% of IT professionals within investment banks looking to switch jobs were being counter-offered by their current employer. The result, according to figures from recruiters the JM Group, was that salaries escalated by between 25-40%.

This, coupled with the need to raise salaries in light of a crackdown on bonus payments, has seen salaries rise further. However, despite the difficulty in recruiting techies, banks are now reluctant to increase salaries any more.

(Increasingly complex) foreign exchange roles

Working as a technologist in FX has long been a good place to be. While the major players - Deutsche Bank, UBS, BarCap, Citi and RBS - need to continue to offer a cutting edge FX e-Commerce platform, other banks playing catch up need harness technology in order to become more competitive.

The result is that, yet again, this year has been a good one for FX techies. However, the IT requirements of banks in the FX space are becoming increasingly complex.

FX IT is not only leaning towards the use of algorithms and complex even processing, but - as Bank of America Merrill Lynch's move earlier this month shows - banks are increasingly developing eFX platforms that offer access to options trading.

And 2010 has been a bad year for...

Contractors

As a company that boasts over 400 financial services companies as clients, pre-employment screening company isn't an absolute authority when it comes to dishing out career advice, but it certainly holds some weight.

So when, two months running, it recommends that IT contractors in financial services consider taking a permanent role if at all possible, maybe it's time to take note.

Not only has demand for contractors waned this year, as investment banks generally try to bring people on board permanently, but there's also the distinct possibility of market saturation as those from the public sector look to switch across to financial services in light of the looming prospect of unemployment.

IT contractors with niche skill-sets will always find their services in demand, but generally the market has been on a downward trajectory throughout the latter part of 2010.

The London Stock Exchange

When the London Stock Exchange acquired Sri Lankan technology firm last year it was greeted with much fanfare, and rightly so. By moving away from its TradeElect platform, which was responsible for its now infamous outage in 2009, the LSE was effectively stating that it was ready to challenge its new tech-savvy competitors, like Chi-X and BATS, which had been eating into its market share.

Fast forward 12 months, when the new system was ready to launch, and the LSE - slightly mysteriously - decided to postpone. In a further twist to the story, it emerged that 'suspicious circumstances' had let to the delay, with rumours circulating that a disgruntled employee (possibly already in the departure lounge) had sabotaged the launch.

As December is an "agreed freeze period" the new system - which could cut trade speeds to 126 microseconds - is due to be rolled out in the new year.

Goldman Sachs' demi-god status

The use of open source technology in investment banking is increasingly common - Linux is, after all, the predominant operating system for electronic trading - but you wouldn't have necessarily thought it would make its way to the hallowed halls of Goldman Sachs.

The case of Sergey Aleynikov, the programmer found guilty of stealing Goldman's proprietary code, showed that (in the code that he took, at least) open source was used at the bank. Goldman denied it, but Benjamin Goldberg, associate professor in New York University's computer science department, testified that the code Aleynikov took contained "lots of open source code".

In his closing statement, Aleynikov's lawyer Kevin Marino said: "The general common notion that Goldman Sachs is the New York Yankees and Goldman's systems are the best ain't necessarily so."