13 Dec 2010

IT and the Future of Finance: How War, WikiLeaks and a Return to the Gold Standard Could Thrust SOA Into the Limelight

Since the start of the 21st century, world news seems to have remained steadily tumultuous. Starting with the Y2K non-starter, there has been plenty to be concerned about, beginning with the 9/11 attacks on the World Trade Centre in September of 2001. From that point on, the world has faces a litany of upheaval in the political, financial, and military fronts. And because the new world we live in is inextricably linked, it only takes one cataclysm to send the rest of the world in a downward spiral.

Nowhere else is this more true than in the world of finance. Over the past decade, we’ve faced the economic fallout from the 9/11 attacks on world markets, and then – just six years later – a worldwide lending crisis that almost set the global economy back to depression-era disaster.

At the end of 2010, those fears still remain.

As the 2008 financial meltdown finally begins to force smaller EU economies like Greece, Ireland, and Portugal to fold under the pressure of a sovereign debt crisis, dire predictions and suggestions have begun to surface from the world’s leading financial thinkers. New initiatives, such as Basel III, seek to stem the time of further economic destruction, while potentially game-changing global economic sea changes, such as decentralising the U.S. dollar as the global trading currency, and even talk of returning to a gold standard, all have financial institutions concerned not only about the next 100 years, but the next year as well.

And with the recent controversial rise of WikiLeaks, the current financial sector hasn’t even had time to consider how the release of damning bank-related documents could bring down financial institutions such as Bank of America.

Truth be told, a fast-changing world is really nothing new to the modern era: in 1910, Einstein still had not developed his theory of relativity, the A-Bomb was but a twinkle, the car was just taking off and the telephone was being delivered to offices to connect post rooms with post rooms. We had never had a World War, and no one knew there were going to be two. Britain was still an Empire and, apart from America, still had colonies.

All of that changed in the blink of an eye.

How SOA will be called on to make a banking realignment work.


Of course, if the world faced potentially dramatic changes in finance 100 years ago, the means of implementing these changes would have not involved retooling technology in the way that it would today. World finance is now predicated on data shared instantly through complex systems, meaning that if the financial system itself changes radically, so too will the IT systems that make our contemporary financial system a reality.

We’ve outlined in a previous article that, the bigger companies are, the harder it is for them to quickly and efficiently keep pace with new financial regulations. A perfect example of this is the new Basel III regulations, which present serious challenges for trading banks worldwide.

Because data sharing and integration are critical components of global banking, new regulations and trading standards could mean challenging new demands put on banks to share and process data relating to trading – standards that could go well beyond even the far-reaching changes proposed in Basel III.

In addition, if there were any kind of “new standard” established in this new century, a massive data changeover initiative would be necessary to usher in a completely new system.

In this way, SOA services could mean the difference between banks surviving the next one or one hundred years.

SOA consultants such as Integrella have the expertise to restructure systems quickly and efficiently to meet fast-changing requirements for banking institutions. Integrella offered these services for financial clients during Basel II, and are now gearing up to provide similar services for the new demands surrounding Basel III.

Now that the global financial system is so far-reaching, it seems to have a life of its own; no one can truly predict whether or not the markets will calm down again, or if volatility and crises will now be the new norm. Whatever the future may hold, one thing is clear: SOA will play an integral role in meeting the challenges of new financial regulations for the next century.

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