Traditional big budgets for IT spend in financial services were with capital markets, banks and custodians and – accordingly – software vendors catered to those firms for offerings and pricing commensurate with their budgets when commissions were higher. For the buy-side, functions performed and operational spend are very different and historically budgets have been substantially smaller than the rest of the street. Vendors catering to asset managers typically looked – and still look – quite different than their sell-side counterparts.
In recent years, the race to zero on street-side commissions, the shift in trading power moving to the buy-side (both institutional and retail) and away from traditional banks, custodians and capital markets providers has created a drop in spending power for the street. Vendors historically catering to the sell-side have turned their attention to buy-side and wealth operations, but often with the same legacy technology and pricing options not optimized or fit for purpose for integration into buy-side and wealth business needs. Buy-side firms need to be ‘buyer beware’ and understand the nuances of full operational costs of adopting and running platforms traditionally used at non-buy-side business units. Complicating the situation further, many former sell-side resources are being hired at buy-side firms and the learning curve for them is steep to understand the nuances and complexities of buy-side trading and operational needs compared to sell-side and bank infrastructures.
In a major turn in financial services organizations, new technology and data platforms fit for purpose for the buy-side are gaining strong attention in the rest of the organization as optimized replacements to legacy platforms. High integration/support costs, lack of true cloud enabled technology and increased security risk from a post-Covid hybrid work environment in their bank, brokerage and sell-side counterparts are rapidly rising on the priority list to remove.
Rimes cloud enabled data and capabilities present a strong value proposition for budget-strapped buy-side firms. Our core business has been to serve the buy-side globally for decades and we understand the nuances of the business and challenges that lie ahead for our client in selecting new platforms to grow with them. Rimes have always encouraged clients to engage in apples-to-apples comparison at a detailed functionality and ongoing support model view when considering new technology, but with the appearance of new vendors in the marketplace that are not dedicated to buy-side needs, Rimes is recommending vendor partner due diligence by its clients more than ever to ensure the value proposition and alignment of vendor client base that represents the best interests of their future business needs.
