Bank of America looking to whittle 50 trading platforms down to one
Bank of America Merrill Lynch is planning to run just one trading platform in the future, down from the current number of more than 50 as it invests in streamlining its technology.
In its investor day conference yesterday it outlined its plans to run a "single platform experience for execution across cash options, swaps, futures and FX" in its investment bank. Previously, the bank ran over 100 trading platforms.
BofA Merill isn't alone in ploughing money into reducing the complexity of its technology infrastructure. Last month JP Morgan unveiled it was spending $500m consolidating its trading platforms in foreign exchange from 10 currently to two by 2014.
BofA Merrill is also looking to reduce the number of applications it runs from more than 1,000 to a few hundred.
"The large investment banks are facing pressure to integrate their complex trading systems, on the back of lower trading volumes, a need to run a more efficient technology infrastructure and regulatory pressure - Dodd-Frank or Mifid II, for example - which is demanding huge changes," says Miranda Mizen, principal, head of European research at TABB Group.
The drive towards operational efficiency doesn't always have a great impact on jobs. In JP Morgan's case, 3,000 jobs of employees who manually process trades will eventually be eliminated. Similarly, Mizen suggests that the reduced complexity of the technology infrastructure will eventually require fewer IT staff within the banks.
And the move towards reducing trading platforms is picking up pace. In a new report into capital markets technology spend released this week, Aite Group suggests that systems integration is the overall top priority this year.
"The holy grail for most banks is a single-dealer platform but, according to our research, most investment banks are looking to consolidate trading platforms. Some are early adopters while others are relative laggards, however," says Bradley Wood, partner at financial technology consultants GreySpark.
The downside of this, he says, is that there will be reduced IT teams and therefore less of an ability to respond rapidly to different business lines. However, he's anticipating a good volume of roles being created because of large technology integration projects.
