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Other priorities top blockchain in new Tabb survey

Blockchain is so 2017.

That's the view of middle- and back-office representatives of money managers surveyed at a TABB Group LLC event in November. They said their top technology priorities for 2018 are cloud computing and storage, cybersecurity and artificial intelligence. Blockchain, or digital ledger technology, ranked last in priorities.

"They just don't think (blockchain) is ready for prime time yet," Dayle Scher, senior equities and technology analyst at TABB, New York, said in an interview. "They're looking at what their custodian banks are doing and then will try to figure it out."

Of the 57 buy-side representatives surveyed at TABB's FinTech Festival in New York about their 2018 tech priorities, 23% said cloud computing and storage; 19% said cybersecurity; and 18% said AI. Only 4% said digital ledger technology was a priority.

The survey was the first on the subject done by TABB, but Ms. Scher said similar surveys would be done at future TABB conferences to be able to measure trends in capital markets' tech use.

Managers' use of the cloud has moved ahead of data hosting, Ms. Scher said, with 33% saying they use the public cloud for software and storage use vs. 26% hosting their own data centers.

"The buy side is way ahead of the sell side and banks in this," Ms. Scher said. "I think they've become more comfortable around cloud security. It's a lot easier to maintain that vs. running a data center. Everything on the cloud is managed by vendors, and it's an easier transition to make than to keep a data center."

Cybersecurity is a priority, Ms. Scher said, as money managers become both reactive and proactive on the issue. "Both of those reasons resonate," she said, as managers were more attentive to cybersecurity after the 2017 Equifax data breach and worked to try to ensure a similar breach didn't happen to them.

AI was viewed by managers in terms of application to middle- and back-office needs such as the automated routing of trades, freeing up resources to apply to more value-added tasks, Ms. Scher said. She added investment-related uses of AI are not being discussed by most money managers — yet.

"The front office has been slow to adopt AI," Ms. Scher said, "but they are adopting it for trade execution. It's not so much with the investment decision process yet."

The buy-side representatives were among 90 conference attendees participating in the survey. Among the 14 sell-side respondents, 24% said AI was their top 2018 tech priority, with cloud computing, cybersecurity, big data and smart contract process automation garnering 18% each. Five percent named blockchain as a tech priority.

Among the 19 banking representatives at the conference, the top priority for 2018 was big data, at 20%, followed by digital transformation and cybersecurity with 17% each. AI was at 13%, cloud computing at 10%, and digital ledger technology at 7%.