London's first centre for financial computing could be
just what the UK's financial services industry needs after the
turmoil of the past year.
The UK Doctoral Training Centre in Financial Computing, based at
University College London
(UCL), aims to produce 10 PhDs a year with combined skills in
science, engineering and finance.
It will train researchers to develop and use analytical tools
for tasks such as risk modelling, algorithmic trading and managing
compliance.
Banks use high-powered systems that rely on mathematical models
to predict risks associated with investments. These systems help
banks to protect their financial positions by making safer
investments alongside riskier ones.
But these systems did not stop banks taking innapropriate risks
that led to the crisis in the finance sector.
Since September, the financial services industry has gone into
free-fall as a result of risky business practices. Banks have gone
out of business, been nationalised or bailed out by government.
Thousands of staff at firms across the world have lost their jobs
and thousands more are expected to.
Scientific background
Financial services companies need people with a strong
scientific background more than ever, says Philip Treleaven,
professor of computing at UCL.
"Because of the credit crunch, all of a sudden banks need the
very best PhDs for very specialist jobs such as analytics and model
building."
Treleaven says banks have been "a bit lax on modeling risk" but
following the credit crunch have realised they need to change. "In
the past they might have recruited people with broad skills, but
now they want people who have gone through a rigorous scientific
education."
More government regulations are expected to be imposed on
finacial services firms following the turmoil.
The use of complex technology contributed to the problems that
have hit the finance sector, says Chris Skinner, CEO at financial
services think-tank Balatro.
"You need mathematicians with technology skills to undo these
instruments and make them safe."
Investment banks
Michael Bennett, director of
ReThink
Recruitment, says many of the IT skills in investment banks are
so highly specialised that staff cannot be cut and the remaining
personnel expected to do the work.
He says investment banks are being forced to recruit IT staff to
address flaws in their systems exposed by the financial crisis.
"Regulatory reforms will impose much more stringent risk management
requirements on the banking system."
Treleaven says it is not just about reducing risk but also
increasing competitiveness. The banks are becoming very scientific
and already have the most advanced networks and computing
technology in the world, he says.
"More research is needed to improve this further. Because of the
financial crisis, the banks want to do more analytics and also want
to speed up their networks and make them more reliable," adds
Treleaven.
The university has the support of the 20 biggest financial
firms. Each has agreed to take on a PhD student. And according to
Treleaven there is no shortage of potential students despite the
turmoil in the industry. "We did a workshop for PhDs interested in
a course in financial services and we thought we would get abut 25
people but actually, we got 300," he says.