Outsourcing Facilitates Division of Labor

Terry Flanagan

Division of labor, the economic concept that provides a foundation for the modern economy, is being utilized in the cloud, as financial market participants show increased appetite for collaborating and outsourcing core tasks that are outside their specialty.

“A new prop (trading) shop does not need to spend time, energy and resources to create front- and back-end systems from scratch in order to compete with established players,” said Mark Haraburda, managing director at Barchart, a provider of trading applications and market data. “Everyone can hone in on their core specialty – using other innovative companies to fill in the gaps.”

A division of labor, in effect outsourcing not only software development, but infrastructure and data as well, “is a prudent choice not only for small start-ups who gain a cost advantage, but large firms as well, who gain domain specific knowledge and expertise,” Barchart president Eero Pikat told Markets Media earlier this year. “Having isolated, well-defined, highly available and independent services provides redundancy and stability to overall systems.”

FinTech has quickly become a buzzword over the past few years alongside healthtech and social. Yet as the recent discussion has bubbled up around FinTech, innovations in financial markets and trading are frequently overshadowed by consumer FinTech. “We want to reframe at least part of the discussion to spotlight innovation as it relates directly to financial markets and trading,” said Haraburda.

“New technologies – cloud-based computing, more powerful servers and PCs, more bandwidth, etc. – bring opportunities for smaller trading firms to be as powerful as the mega-banks, all the while maintaining their agility,” he added.

FinTech Exchange, a new event organized by Barchart OnDemand in association with FinTEx Chicago, will focus on new technologies in trading software, analytics, market data distribution and cloud computing. The event is intended to communicate the latest in financial technology for financial markets and trading firms.

“Technology continues to spur a revolution in financial services, especially in segments like exchanges and trading where speed is a primary source of advantage. To stay competitive, firms need to continue to innovate,” said Jason Henrichs, founder of FinTEx Chicago. “Working collaboratively with adjacent sectors is critical to accomplishing this.”

Featured image via Makkuro_GL/Dollar Photo Club

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