Is there room for art in financial visualization?
October 25, 2007
I have long been surprised by the lack of novelty in financial visualization. Even as maps, video-games and operating systems become more and more adept at 3D, colors, layers and animation… the screens of Wall Street keep showing the exact same graphs as usual. Last week, in a panel on financial visualization, I learned the reasons for this lack of innovation. And I made an argument for the opposite.
Consider just how puzzling the existing status quo is with regards to visualization. Bloomberg, the market leader in analytics, offers the same 1980s-style aesthetics that it did two decades ago. Tickers, that ineffective relic of the pre-Internet era, continue to grace the screens of CNBC and the streets around Times Square. Yahoo and Google offer the same graph that retail investors have been using for years — a plain-vanilla price chart. Even Apple’s iPhone (supposedly, the epitome of the cool) has the same chart.
This is surprising, because existing visualizations do not support profitable trading strategies. Indeed, most systems are based on timely news and time series of stock prices and volume. And yet, we know from basic financial economics that both past prices and news are a bad predictor of future stock prices. As for the ticker… the animated display of selected stock prices is a low-bandwidth visualization born in the era of the telegraph. That’s right: 19th C. Nowadays, information can travel much faster, and one does not need to wait for “my stock” to come up on the ticker.
Why this un-innovativeness? That was the question I asked myself as I took the subway to downtown Mantattan. The panel was organized by the New York chapter of the Usability professionals (essentially: designers), joint with NYC Wireless. The presentations of the rest of the panelists — all three very smart, very sophisticated professionals — made very clear the difficult situation that designers suffer as soon as they start to work for a Wall Street firm.
One of the presenters, a brilliant and charismatic designer, was responsible for the Intranet at a major credit card company. According to her, 70% of Wall Street intranets are just numbers. Why? Other concerns prevail over graphic sophistication. First, in finance, heavy regulation forces different parts of the firms not to be able to see the same information. So firewalls are very important. Second: designers get little training. “How can you communicate with the bankers,” the presenter asked, “with only a 20-minute online tutorial on risk management?” Third, mistakes “cost millions.” And fourth, convenience is everything: “we had to completely redesign the system so that the bankers could read it on a pdf on their way home to Westchester.”
The second panelist, an acclaimed designer in his “previous life” and now head of visualization at a major Wall Street bank, abounded on these issues. The bank, he said, had more people working in IT than the entire employees of Adobe. But visualization has only arrived to two percent of software, and most of it to its intranet — the hidden part. How come? “Traders are very busy. They make an incredible amount of money, and their time is very valuable. They cannot commit to meet you at such-and-such time to discuss changes in the system.” The designer finally found a way to work with them, but even this is very telling: “I say to them, ‘I’ll come to your desk tomorrow at nine, and when you have a minute, tell me what we do.” In addition to this, traders are very practical and resist innovation. “If there is a yellow button on the left for the escape function, they need to see it in the next version of the software.”
In short, the picture of Wall Street designers that comes across is revealing. The designers in are smart, able, savvy. But they make up an distinct community of practice, one with lower status, limited financial knowledge and one that does not seem to fully communicate with the traders and bankers. In terms of innovation, they also seem to be paralyzed by the needs of their users. As as we know from Christensen’s “The Innovator’s Dilema,” users are a conservative group.
What, then, is the way ahead? I believe that innovation will happen. But it may not come from the internal design teams on Wall Street. Along with Christensen, I expect that it will come from some low-end entrant to the industry. (And it is interesting that there were people in the room from the entertainment industry.) My own presentation discussed some potential avenues for innovation, based on my curatorial work on art that is based on finance. Please see below a PDF document of the presentation.