Finance And Audit Sectors

Published Date: 02 Nov 2017

"The first thing you might think a computer science graduate does is programming. Programming is a tool we all use, but primarily computer scientists solve problems. They are creators, designers, analysts, etc. They work with people to develop innovative ways to harness the power of computing to address problems in almost every discipline and industry sector." (School Of Computer Science, 2013)

This paper will begin with the definition and classification of computer scientist. Some classified the computer scientist as part of the Information Technology professional. Computer scientist has quite common characteristics with the computer engineer or software engineer. As the names carry, scientist is people who study things and an engineer is the one who build and create things. However, these definitions are not rigid, as there are computer scientists that built computer software and also software engineer that study things. (MILLER, K.W. and VOAS, J., 2008). So for the rest of the paper, the term computer scientist will also include computer professionals such as software engineer, programmer, computer support specialist, computer system analyst database administrators, and any job that can be applied to the vast range of computer professionals.

Finance and audit sectors

In this technology driven world, a demand for technologically skilled professionals is increasing. Many sectors including financial and audit sectors require not only financial expertise but also technology expertise to handle the everyday tasks in the sectors. Financial sector need to face the ever growing pace of technology and cope with it to ensure they are moving concomitantly. In this fast moving world, everything needs to be precise and quickly done and these include the finance and audit sectors that involved many high risks task.

Finance sector is a segment of the economy that containing financial intitutions that provide financial services to commercial and retail customers, this includes banks, investment funds, insurance companies and real estates and the services they offer are banking services, mortgage lending, commodity market exchanges and also investment services to name a few. Financial sector can make up a sizable portion of a nation’s economy, for example in the United Kingdom, the Gross Value Added (a measure of the contribution of a sector to an economy) is £125.4 billion which is 9.4% of the total economy. (Maer, L. and Broughton, N., 2012). This big portion of financial sector in the economy not only opens up a job opportunity to the graduates from the business or financial related background but also to other backgrounds and this includes computer related background.

Audit can be classified as

"The examination of the financial report of an organisation - as presented in the annual report - by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes" (PWC, 2013)

Audit sector is compromises of many audit firms that offer auditing services and the most a credential one are the Big Four audit firms. The Big Four is PWC, Delloite, Ernst and Young and KPMG.

Current needs

Financial institution and information technology are both dependent on each other. Financial firms need information technology to offer their customers a "convenience, speed, simplicity and low transaction fees, and thus they must work with the most reliable, robust, resilient, and cost effective technologies available in the market" (dspace), and information technologies providers rely on financial institutions as their users.

Banking

"When Jes Staley, head of JPMorgan Chase’s investment bank was asked how his industry would survive in an era of lower returns, he answered with two words , ‘technology’ and ‘revolution’ "(Guerrera, F., 2011)

And many of the banks agree that information technology will become the saviour of the industry in coming years. In banking services for example, computer scientists are needed especially in handling the new technology and software that run the industry today. Everyday transactions were handle by computers, embedded systems and machines and less human interactions were involved. Citigroup Inc., which is an American multinational financial services provider and was a product of at least four mergers, had exceeded many of the Silicon Valley in their numbers of software developers by having as many as 25000 softwares developers in 2009 and At Goldman Sachs, the Information Technology staffs including the computer scientist, had gone twice the rate of 10 years ago and make up almost one third of the entire employees of the bank (Guerrera, F., 2011) and these examples show how much computer scientists are needed in the financial sector.

Stock exchange

Information technology has benefited many industries throughout its development and stock exchange market in not exception. With the help of technology, millions of pound of transaction changes hands in milliseconds every day. Stock exchange is a place that never sleep or stop, there will always be a transaction happening in at least one part of the world, and thus a very reliable and efficient system are needed to fulfill it requirements.

"In 1987 the London Stock Exchange was transacting as much business in a month as it did in a whole year before 1986, with an average daily value of £1bn. Today, the average daily number of shares traded is 566,000, with an average daily value of £16.6bn." (Flinders, K. 2007)

An average daily value of £16.6bn is not a small figure and it is not possible to achieve without the implementation of technology, computer, embedded systems and computer software to minimize the time from when the transaction is initiated and the deal is completed. Computer scientists are needed in writing good programs and building systems for the stock exchange market as it can provide a very crucial services to the management (Reich, C. 2003)

Algorithm trading

One parts of stock exchange that needed computer scientists the most is in the algorithm trading. The amount of trading in the stock exchange nowadays is too high that there is almost no human capable of to manually done it. A certain degree of automation is needed to reach this amount and thus computers are used to initiate many trades using algorithms.

Stocks have been traded electronically for years

Financial sector involves a large amount of money traded by computer every milliseconds thus it is prone to be attacked by criminal. Cyber security will always be a major interest of financial firms as ‘attacks on computer systems and network of the global financial markets are always likely to be attractive to criminals’ especially since the financial market becomes more and more dependent on computing technology (Cliff, D). A specialist in technical assurance and the architecture of computer systems and security is needed and this is where a computer scientist comes in handy to make sure important information within a firm do not ending up in the wrong hands (Wilson, P., 2011).

Internet banking

Internet banking has become one of the mainstream medium for account holder to access their accounts. In 2011, around 25.8% of the internet audience accessed online banking worldwide and in 2012, 423.5 million peoples used internet banking sites and showoed an increase of 2.9 %. (Com Score Data Mine, 2012)

"Six in ten (59%) citizens connected on the internet have used the web to ‘check bank account and other financial holdings’ in the last 90 days. The vast majority of Swedes (88%) are e-banking, as are three quarters in France (76%), Canada (75%), Australia (74%), Poland (74%), South Africa (74%) and Belgium (73%). Only one quarter of those in Mexico (23%) are shopping online, joined at the bottom of the list by Saudi Arabia (29%), Brazil (32%) and Argentina (36%)."(Golttried, K., 2012)

With the increase of the internet banking users, more computer scientists specialized in web development and cyber security such as encryption are needed to administrate the process of online transaction. Financial firms such as bank and insurance companies need to hire a computer system and architecture specialist to give confidence to their customers in the security of online banking and avoid fraud.

Mobile banking

Mobile phones have becomes a major instrument for people to connect themselves and doing everyday duty. In 2012, there were 5 billion mobile phones users, which is approximately 80% of the world’s population and 1.08 billion were smart phones users and 91.4 million alone in the United States(go-gulf) . Financial firms such as banks have been exploiting this trend to get closer to their customers by engaging the mobile applications. For example, before, most account holders will need to go to the bank or ATM be in front of their computers to check their account balance and doing a transaction, but nowadays it can be done at the tip of their fingers using smartphones anywhere and everywhere they want with the help of internet connection. This is major field where computer scientists are needed especially applications developer to develop the mobile applications that can catered what the customers need. As much as internet banking need internet security specialist, so do mobile banking. It took quite some time for customers especially for the older demography to engage in internet banking as they were concerned with the security aspect, so financial institution need computer scientists specialized in mobile banking security to have the customers trusts.

Database system

Most financial institutions have a large amount of data that need to be stored in the database, so a sophisticated database systems are essential for them.

Outsourcing

Outsourcing is the term use for the process of subcontracting an internal process, such as management of information technology , data storage, design project and everything in between to a third party company. (cio.com) Financial institutions opt for outsourcing their management of information technology to the third part information technology company mainly because of it is more cost effective than using internal staffs. Furthermore, not only small size firms that deployed information technology outsourcing, but big firms sometimes prefer to outsource. For example, a deal have been signed for a 10-year contract between IBM Canada Ltd and the National Bank of Canada, where IBM Canada Ltd will be responsible in the management the operations of the bank's IT infrastructure, including its Web environment and call centers. Apart from that another companies that outsourcing its Information Technology management was Bank of America. Bank of America signed an agreement with Diebold Inc where Diebold Inc will be responsible in providing ATM maintanence for Bank of America. (Mckendrick).With the outsourcing mechanism, computer scientist will still be needed in the financial sector eventhoug they are not directly working in the sector.

In the future

Cloud computing

It is expected that many more financial firm such as…. Will be adopting cloud computing in the near future. Cloud computing is where client can remotely accessed the ultra big data centre that made up from many interconnected computer via the internet using their remotely-accesssed computers by paying an amount of rental cost to the provider. This is consider a much cheaper alternative compare than having high performance computing at every workstation in the firm. The implementation of cloud computing in the financial and audit sector will not only benefited the financial firms in term of cost, but also to the computer scientist especially for expertise in cloud computing technology as they will be needed the most as the support systems for the company to operate the newly implemented technology. Hopefully in these coming years, cloud computing provider will be able to provide a cheap high-performance computing to enable the financial firms to deploy the services for the automated and optimiszation of trading procedure and execution of complex algorithms. (bis gov)

Speed computer

In the trading markets, everything needs to be done promptly and thus this requires a super fast computer. Before, computer only single central processing unit, then it moved to multiple independent computers know as cores. Currently dual-core and quad core chips have become common.

"Personal computers (PCs) have over recent years moved from being based on a single central processing unit (CPU) chip such as an Intel Pentium, to a new breed of CPU chips that have multiple independent computers (known as "cores") built into them. Perusal of high-street stores will reveal PCs with dual-core and with quad-core chips as standard. In rough terms, a dual-core chip can do twice as much work as a single-core chip per unit of time, and a quad-core can do four times as much"

However, trading industry needs a more speedy computer and can do multiple times as much work as it can. These requirements has induced to financial market leader to ditch out the general purpose PC’s and opt for a custom silicon that can be programmed to their special needs.

"Currently the most popular such technology is a type of chip known as a field-programmable gate array (FPGA). Programming an FPGA is a very complicated and time-consuming task: the programmer has to translate an algorithm into the design for an electronic circuit and describe that design in a specialized hardware description language."

The field-programmable gate array will need a programmer to build it and it is not an easy task, and even after the completion of the chip, an expert is still needed to ensure the chip always meet the requirement. Put aside the complexity of the change over to the field-programmable gate array is unavoidable because of the speed it offers. So, any firms that adopt this chip will need a great support system team compromise of computer scientists to ensure the trading system is sound.

With more time, it is expected that the field-programmable gate array will substitute by a easier method to custom made it where it can be programmable in high level language as how the current custom sillicons are made. With this, trading algorithm can be written by any conventional-trained programmers and thus increase the amount of firms implementing the custom made chips and increase the need of programmer in the financial sector to operate the new trading systems using the high speed chips.

Branchless banking

"Branchless banking is the delivery of financial services outside conventional bank branches through the use of retail agents and information and communications technologies to transmit transaction details. By relying on already existing retail infrastructure and widespread technologies, such as mobile phones, branchless banking dramatically reduces the cost of delivery and increase convenience for customers." (cgap)

Branchless banking has been implemented by banks around the world however the implementation is not whole. Automated teller machines(ATMs), Internet and mobile banking are some of the examples of branchless banking. Branchless banking is a great strategy for bank to make their way into the unexploited potential by bringing the banking systems to the rural area. In Mexico for example, only 27% of the adults population have bank account, and this is actually a huge business potential for a bank, however, to build bank branches across a country where the potential customers will only save in around 2 to 3 digits of their incomes is not a cost wise investment and this is where branchless banking comes in handy. With a machine looks like a phone with a touchscreen next to it installed at a local business where it is directly connected to the banking network so the users can accessed their account and withdraw money. Once the bank receive the users’ banking request from example withdrawing money, the local business will then receive a message from the bank to give the user the amount they require and the bank will then reimburse the local business. (good.si)

So what is the connection of computer scientist with this new method? Computer scientist might not be working at the front end of the system, but they will be the one who built the branchless banking systems and the maintinace of the banking network connected the machine with the bank. More and more computer expertists will be needed in the financial sector as more banks are going to implement this strategy such as banks is Indonesi(the Jakarta post)a and Pakistan (financial post, proquest)

Computer security

Conclusion

The current needs of computer scientists in financial and audit sectors will always be needed for at least in a decade time, and together with the advancement of technology, the need of computer scientists in those sectors will on getting bigger. With the adaptation of embedded computing systems and super computer to perform everyday tasks in financial and audit sector, less front end human interactions are requires. It is possible that someday, the financial and audit sector will only need and recruits graduates from computer sciences background and replace MBA graduates as computer become the major instrument.