Ronan Bradley's FinanceTech Directions

That Dresdner Kleinwort will be radically downsized as part of the take-over of Dresdner by Commerzbank is a sad announcement on a number of fronts – not least of course for the individuals who will lose their jobs in the process. However, it is also another step in a process of consolidation over the last 10 years or so which has a real potential to damage IT innovation in financial services and beyond.

Back in July 2007, I wrote – focusing specifically on SOA but the point extends to most infrastructure software …

“This [ investment banking sector] was the traditional birthing ground for so many software infrastructure products and vendors. This consolidation means that there is much less room for SOA start-ups to build before breaking out into other industries. From my own personal experience of being involved with companies selling into the investment banks from the mid-nineties on, I can say that the task has got harder but more importantly the list of possible targets has got much much shorter.”

Since then we have seen the disappearance of Bear Stearns as a separate entity and now the prospect of DKW being reduced to a rump to quote Reuter’s reporter, John O’Donnell.

DKW has had an honorable history of innovating in the infrastructure space and its CIO, JP Rangaswami, has been a notable early promoter of concepts from Open Source with DKW’s Open Adapter integration framework to Enterprise 2.0. It is hard to see where innovation will appear from to fill this gap.

Ronan