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May 10th, 2008

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May 7th, 2008 issue

Barclays Capital is the investment banking arm of Barclays Bank, one of the largest financial services companies in the world. Recently, Barclays Capital announced that it would be opening a major information technology (IT) facility in Prague. Sarah Grave, who will head the center, talks to The Prague Post about the increasing complexity of trading instruments and how IT has revolutionized global finance.

JAN PŘEROVSKÝ/THE PRAGUE POST

Grave will lead a Prague team of IT experts who will work closely with Barclays' London offices. enlarge

THE GRAVE FILE

Job title: Head of Prague IT, Barclays Capital
Age: 31
Nationality: British
Previous position: Software developer and manager, Deutsche Bank
Education: B.S. in computer science, University of Nottingham

? What prompted Barclays Capital to launch IT operations in Prague?

We were looking to establish a nearshore site within close reach of our London office, both in terms of location and time zone. After researching several locations, Prague was chosen as the right place to launch the operation. We chose it because there is a mature IT market, the education system is strong and Prague is a hub for talented IT people from Central and Eastern Europe.

We’re going to be recruiting in Prague over the coming months in order to build a team of between 50 and 90 people over the next two years. We’re looking for people who want to gain an understanding of the business in which they work while developing software for it.

? What specific work will be done in the office?

We’re setting up an IT development site to work on projects of medium to high complexity that require significant interaction with our IT people and business users in London. Many of these will be supporting our cutting-edge front-office trading functions, as opposed to general IT support staff. Development teams of up to 10 people will be set up and aligned to a specific business area of the bank. Our aim is to build a set of specialists in Prague in specific areas. Our global organization will then use Prague for these projects.

? Salaries in Prague are quickly moving toward Western levels. Was there ever any thought of opening the office farther east, in Romania, for example?

We did look at other sites while researching Prague. However, cost, although a factor and a key benefit, was not the primary driver in selecting Prague. The quality and depth of the talent pool, strong IT culture and the local infrastructure were considered to be more important factors.

? Barclays spun its investment banking arm into a separate company, Barclays Capital, in 1997. You’ve said that due to its relative youth, the IT division is not burdened by legacy systems. Are many other banks so burdened?

It’s common for other banks to have large programs replacing their legacy systems, e.g., systems running on mainframes. We don’t have this kind of project at Barclays Capital.

? According to your literature, IT has become increasingly influential in the bank’s operations. How so?

We are constantly increasing our understanding of the business areas we work for. This allows us to get better at showing the business where IT can be used to help them improve client relationships or generate more revenue.

? How dramatically has IT changed banking in the past 20 years?

It’s had a huge influence on banking. Prior to the birth of the Internet, business was conducted over the telephone and stock exchanges used open outcry. Now, the majority of stock exchanges use electronically based exchanges and simple products are traded over electronic communications networks [ECNs] or the Internet. This has meant that investment banks have been able to focus on building more complex products and algorithmic trading systems.

? Investment banks have been drawing a lot of math and IT talent in recent years to develop complex derivatives and trading systems. With the growing intricacy of global finance, are there fewer people who can understand how these algorithms work and what risks they entail?

There is certainly a bigger demand for these skills in investment banking and a shift toward hiring mathematical expertise on both the trading and IT side in certain business areas. It’s always important that we understand the risks that we take, so there will always be enough people in our organization who understand these risks and are able to manage them. We’re seeing an increasing number of our existing staff learning these skills in order that they can develop their business further through building more complex products.

? How much of your IT operations involve working with outside vendors versus purely in-house solutions?

The majority of our solutions are built in-house, but we do use vendors where appropriate. This would typically be for a part of the business that is commoditized, like connecting to ECNs, where we can’t add any value or competitive advantage by doing the development ourselves. This is quite typical of the big investment banks, while smaller investment banks and buy-side customers tend to use vendor packages more often.

? With IT being such a rapidly evolving field with new skills to be constantly learned, what steps do you take to allow your employees to keep their talents fresh?

We encourage all employees to take an active role in their own development and look to recruit people who take a proactive approach to learning. On a formal basis, we ask them to create development plans that cover anything from training courses they would like to take to learning from another team member. We also provide tools for our employees to use to improve their skills, like online training courses and online book subscriptions.

As an IT organization we are focused on delivering to our business. This means that we use the most appropriate technology for the project. This won’t always be the newest technology. Other companies, more focused on research, may offer the chance for their employees to try new technologies more frequently. My personal view is that when IT professionals have a real passion for IT, they will keep themselves up to date with new technologies on a daily basis and won’t need a company to prescribe a method for this.

? There has long been a stereotype of the divide between IT departments and the rest of a company’s operations. Is this gap, if it exists, narrowing?

It depends on the company’s business. In investment banking, many of our businesses need IT solutions to allow them to increase their revenues or access more customers. This gap is certainly narrowing in our field, as the industry grows more and more electronic and the customers expect the best service.

Want your manager to answer our 10 Questions? Contact Paul Voosen at pvoosen@praguepost.com

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Reader's comments:

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[18:03 08/05/2008] : Let's hope that some of this IT work trickles down to Barclay's poor, long-suffering customers. The company's Internet banking facility is unintuitive, a nightmare to install and appears to have been created by a student in his spare time. It lacks all but the most basic and obvious features. Customer support is painful.

Rather than setting up "cutting-edge, front-office trading functions" Barclay's needs to find somebody who can create a simple Web site.
A few hints:

Don't use Active X: not everyone has or wants to use Internet Explorer. Amazing as it may seem, not everybody even uses Windows.

If you insist on using Active X, at least tell your customers, so they don't waste hours trying to get the system to work with Firefox.

Or: find somebody who understands how to use AJAX and do the job properly.

Let your users see more than the last three months' of transactions: ask around for 1,000 Kč to buy a new hard drive if you can't store all the data.

Look at a company that has done the job properly and copy them. Or maybe ask your poor wretched customers what *they* need.

Organize your menus logically, rather than at random.

Try not to create five steps when one would do the job better.

Read a book on basic Web site design.

Perhaps moving to Prague will get Barclay's IT "skills" up to a more acceptable level.

John Ainsworth
Prague

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