The SaaS-based WebRTC initiative supports browser-to-browser applications for voice calling, video chat and peer-to-peer file sharing. Greg Kenepp, president of Cloud9 Technologies, says that WebRTC will eventually replace those ubiquitous trader turrets found inside investment houses around the globe.
Some of us remember the "bricks" that were the early predecessors of today's smartphones. In the world of trader voice, turrets are the equivalent of old brick phones, cumbersome dinosaurs that are destined for extinction.
Turrets occupy significant desk space on a large number of trading desks, and account for major equipment and line costs for banks. In addition, where disaster recovery sites are required, equipment and private lines double the costs, and mobility isn't even an option. Web Real-Time Communication (WebRTC) is about to dramatically change all of that.
Outside of people, technology is the largest investment that financial institutions make. Given its sweeping impact, it's remarkable that little has changed about the way traders talk to each other. Indeed, squawk boxes and trading turrets are a far cry from providing capital and workflow efficiency.
Enter WebRTC, a technology that is about to usher in a new era for trader voice. Not only has it begun to serve as the core of applications that will introduce more modern and efficient communications, but it promises to deliver hundreds of millions of dollars in savings versus the proprietary hardware and dedicated telecom lines that still dominate most trading floors.
A trader voice application powered by WebRTC—a technology created by Google, and which is seeing support in a wide variety of industry, and not just the capital markets—has several major advantages over cumbersome and costly trading turrets. An application built on a WebRTC foundation is ideally suited for collaborative environments, like a trading floor.
Coupled with a proprietary layer to address the unique requirements that are the hallmark of the financial markets, traders can benefit from an application that features high-fidelity acoustic capabilities, zero-tolerance for packet loss or call failures, ultra-low latency, end-to-end encryption, and a fully compliant audit trail.
A Brave New World
Ironically, WebRTC technology often exceeds the standards for reliability and compliance that were the reasons put up to keep modern technology out of the trader-voice industry. Above and beyond its efficiency benefits, the mobile use of WebRTC apps means that the need for redundant equipment at disaster recovery sites has been eliminated, doubling the financial incentive to retire the aging SIP-based boxes. Let's look at the numbers.
The average trading turret hardware costs around $10,000 up front. For a desk of 1,000 people that represents tens of millions of dollars in sunk costs. In addition, each trader requires private lines, that can cost a few thousand dollars. A comparable WebRTC solution costs up to 50 percent less, representing material savings without compromising security, service quality, or performance. In addition, where traditional trader-voice solutions could take months to set up, a software-as-a-service (SaaS)-based trading app can take minutes to install and establish connections on a trader desktop.
WebRTC goes one step further, adding the capability for video and messaging to traditional voice telecoms. As a result, not only can legacy hardware be replaced, but new and more collaborative tools can be introduced to address the frenetic work environment on a trading floor, where many people are communicating important information simultaneously.
The Future Has Arrived
Cloud-based technology is no longer new in our lives; in fact, it's mainstream. Perhaps surprisingly, the financial industry has been slow to adopt many of the web-enabled solutions that would drive increased operational efficiency, while freeing up capital. But while compliance has often been the reason given for slow adoption of new technology, the truth is that the market is fairly monopolistic and traditional turret providers have been slow to innovate due to the favorable economics of the current business model. Without viable alternatives, traders have become reliant on technology that they know and are used to.
However, mindsets are changing as the trend of the consumerization of enterprise technology continues to forge a path through the financial industry. In the same way that WhatsApp, LinkedIn, and Facebook are embedded in our daily lives, cloud-based technology offers far too many advantages to be over-looked. The widespread use of WebRTC technology as the foundation of collaboration tools across the financial industry is inevitable. For firms that bury their head in the sand, the consequences will be costly.
It's not just the trading floor that stands to benefit from WebRTC applications. In the future, all aspects of communication will be dominated by technologies like this, not only in the financial services sector but across a wide spectrum of industries where there is a need for highly secure, end-to-end communication and collaboration. It's a quiet revolution in the world of communications, but telephony as we knew it is on the verge of extinction.
Greg Kenepp, president of Cloud9 Technologies LLC, has more than 25 years of experience in technology, software, finance and network services companies.
Jesse Lund talks about real uses for DLT in the capital markets, lessons learned while rolling out IBM's blockchain platform, and what’s ahead for 2018, and into 2019.Subscribe to Weekly Wrap emails