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May 31, 2001

Tech Trumps Tradition

By Matt Fox

Advances in technology have reduced entry barriers for securities industry firms, resulting in the commoditization of many services and a shift in customer loyalty.

Increased economic and regulatory pressures are also forcing rationalization of the marketplace. Companies with the funding to reach profitability and the capability of executing a business plan with precision will prevail in an environment that values the "bottom-line."

In this new era, the introduction of each emerging technology potentially will undermine all previous advances, favoring companies that are effective at promoting industry initiatives and improving business processes.

That will result in greater efficiencies for the world's markets. As the foundations upon which many financial services firms built their value propositions quickly erode, companies are embracing new strategies and refocusing on their core businesses.

New Entrants

The rapid adoption by firms of next-generation technologies will allow new entrants into highly competitive arenas, at the same time converting once value-added offerings into commodities. Brokerage services are an example: trade execution services, in particular, which only five years ago were considered to be a high-value offering, are now available at no charge.

How do companies stay above the "rust level" and reinvent themselves by leveraging new technologies instead of allowing those same technologies to render their businesses obsolete? Although there is no single answer, it is obvious that companies must exploit their core capabilities in ways that make their products and services more convenient for the consumer. The new business environment will favor the products and services that are easiest to procure and best integrate into the customer's overall operating model.

These factors were the driving forces behind the strategic partnership formed between Global Crossing and SWIFT, the industry-owned cooperative supplying secure messaging services and interface software to the financial community.

The cooperative carries 1.2 billion messages a day, valued at more than $5 trillion. The decision of SWIFT to sub-contract the design, management, and maintenance of its network, will allow SWIFT to focus on developing its core business of providing secure and reliable messaging services to its 7,000 client institutions.

SWIFT's various partnerships are an example of how companies can leverage each other's fundamental expertise, and work together to make their products and services more available to the consumer.

A faster, more scalable and more flexible network means added convenience through easier access to SWIFT's applications and services on the network. Additionally, services from other vendors can be provisioned more quickly than ever before to a larger installed community of users, resulting in reduced time-to-market and tremendous cost savings.

SWIFT announced that through its Partner Solutions program, Financial Fusion, a leading provider of financial middleware applications, it would become the first SWIFTNet-enabled vendor to utilize SWIFT's new messaging infrastructure for the transmission of FIX messages.

FIX Protocol

The ability to send and receive FIX messages across SWIFTNet will bring an unprecedented level of service and adaptability in the use of the FIX protocol. It will make it more convenient to implement and integrate into the customer's business model.

For example, the immediate generation of a "notice of execution" message (NOE) for a security transaction will allow trade-processing functions to occur between firms simultaneously as opposed to sequentially. That will help the industry to realize the benefits of straight-through-processing in a more timely fashion.

In the end, consumers will favor those businesses with products and services that save them time and money. Their products and services must be convenient to purchase and use, and must fit into the overall business processes of the consumer. Partnerships being formed by SWIFT

will help advance many of the industry's initiatives, improve operations and bring greater efficiencies to the world's financial


Matt Fox is director of strategic marketing and planning at Global Crossing Financial Markets.