UBS’ investment bank wants to make its technology «sweat,» according to operating chief Beatriz Martin. That includes selling big data services and a foreign exchange trading tool to third parties, finews.asia has learned.
Revenue at the Swiss bank’s securities arm dropped nearly ten percent in the third quarter to $1.75 billion. More importantly, the unit’s cost-income ratio – or how much it spends for every dollar earned – climbed above 90 percent.
Investment banks have given up waiting for markets and volatility to turn in their favor. Instead, they are seeking new ways including marketing their technology to clients or even rivals: Symphony, an industry chat platform backed by Goldman Sachs, is a prominent example.
Big Data, Trading
UBS is poised to market its so-called evidence lab, a group of data scientists devoted to big data, as well as Orca, an algorithm for trading foreign exchange which recently widened its use to rates, people familiar with the matter told finews.asia.
«We think potentially we could externalize our own assets,» in a few cases, the unit’s operating chief, Beatriz Martin, said at a recent media briefing in Zurich. «I don't think we are very far away from doing that. And in fact, that is very much in our future plans from the investment bank’ digital transformation.»
She declined to comment on specifics. The move to «sweat» its technology more is part of a six-month-old tech push to bring 100 technology staff, account managers, and product developers together.
Clients' Tech Curiosity
In particular, UBS clients are discussing questions of connectivity, latency, cloud-based applications, and data architecture – all themes that UBS have in the past said it is also closely scrutinizing.
«Clients are extremely interested in what we are doing on the information technology side as well. And they want to have conversations with the IT guys to understand how we’re thinking about it,» Martin said.
The idea of «sweating» technology and for IT departments to be contributing to revenue isn’t new – but UBS has been slower than some of its Wall Street rivals to get there. Its disparate tech operations include a development lab working on tokenizing physical gold, debt, and structured products, as finews.asia reported last month.
Hedge Fund Demand
Martin, one of UBS' most prominent female bankers, is an associate of ex-unit head Andrea Orcel. She pushed for – and won – the title of U.K. head following his exit last year, in addition to operating chief under co-heads Piero Novelli and Rob Karofsky.
UBS’ clients, especially hedge funds, are looking to get smoother, faster service – such as so-called straight-through processing. «When you look at the big clients on the market, the things they look at are quite sophisticated,» according to Martin.
«Discreet» Improvements
Since launching the hub earlier this year, UBS said it has rolled out 60 «discreet» tech changes, and plans more by year-end. UBS’ products may be sophisticated, but a detailed discussion with clients on their expectations frequently reveals gaps at the bank.
«If you can't separately handle product lifecycles for example, it may be such a pain for the client that they don’t want to consume those services from you,» she said. «That is a real cost for clients. So there are things that we need to change.»
