Lack of innovation in hedge fund IT down to employment protectionism

As the legions of traders who have lost their jobs in the wake of e-trading will testify, technology can be a mixed blessing in the financial sector. On the one hand it has the potential to save millions, but on the other it could result in swathes of redundancies. So, what if the people in charge of making the decision to invest in that technology are the ones with the most to lose?

Hedge funds could save millions on portfolio analysis, cutting costs by up to 50%, and increase efficiency by embracing cloud computing, according to new research by Greenwich Associates. However, few are willing to make the leap because technology teams are fearful it could result in job losses.

“For professionals whose job is maintaining a massive server farm, talk of cloud computing is nothing more than outsourcing themselves out of a job,” says the research. “This means the conversation must include not just the CTO, but also the CFO whose goal is to grow the top line while shrinking the bottom line.”

Is this really the case? Recruiters in the financial technology sector believe that cloud computing is rarely a core requirement in any new position, but an understanding of the concepts are now essential for anyone working in an infrastructure position.

“Every hedge fund hiring infrastructure staff is asking for an understanding of cloud computing, from a security, cost and disaster-recovery perspective, as well as those who can manage the relationships with external vendors,” says Nick Finlay, head of investment management at Hays Finance Technology.

Cloud computing is still only used by a tiny proportion of hedge funds, largely down to the lack of risk-taking in IT teams, suggests Greenwich. Risk-taking is rewarded in trading, but “grounds for dismissal” if the tech teams take a gamble and get it wrong, it says.

“When it comes to their own infrastructure, they do not chase the next big thing. Rather, they wait to adopt tried-and-true solutions that they know will be both effective and cost-effective,” says the research. “This perspective has ensured that, when it comes to advanced cloud computing, Wall Street would be part of the early majority rather than an early adopter.”

At the moment, most hedge funds remain sceptical that the costs of investing in cloud computing will be worth the benefits it provides. For technologists, though, it’s really an opportunity, believes Finlay.

“Cloud computing is not a threat to jobs, but an opportunity for people to evolve their skill-sets,” he says. “They move on from being a very hands-on technical individual to a more strategic position, who can maintain the relationship with outsourcers and look after the interests of their employer.”

It can also be a lucrative career path - a cloud computing infrastructure specialist can earn between $142-207k, according to recruiters Robert Walters.

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