Eugene Grygo, Chief Content Editor, FTF News
The securities industry is at an interesting crossroads.
It is facing some of the most exciting trends in IT in many years: artificial intelligence (AI) and machine learning, robotic process automation (RPA), the realities of Big Data and cloud computing, and the much hyped emergence of blockchain/distributed ledger technology (DLT). Even the mysteries and controversies of bitcoin and other digital currencies point to a future we can’t avoid. Throw in the fact that regulation has spurred “reg-tech” innovation over the past near-decade and the industry is on the verge of something big.
But there are two elephants in the room that could crush these innovations before the industry has had a chance to fully grasp their importance.
The first elephant is a reliance on manual or semi-automated systems and workflows. Time and again (especially when we are crafting the content for conferences) we have to consider what I would call “the manual factor.”
While I want to rhapsodize about AI and other exciting innovations, I have to stop and get a reality check.
Many firms may still be using fax machines to finalize contracts let alone adopting “smart contracts” via DLT/blockchain. Others may be heavily reliant upon Microsoft Excel spreadsheets and manual entry of important data, be it big or small. For others, a database may be a functional Rolodex and/or file folders.
Yet it’s not that innovation doesn’t make its way into many firms.
For instance, it’s been my experience that the joys of cloud computing are now — about six years in — becoming reality for many buy-side firms. The reluctance among firms has given way to the security, reliability and cost-savings that cloud computing offers even if it means leapfrogging over manual systems and over the second elephant — data silos/political fiefdoms within an enterprise.
This second elephant may be more difficult to remove than the first one.
In a recent discussion about data governance at securities firms, I was sadly informed that chief data officers (CDOs) often do not have wide authority over the entire enterprise. Instead, they have limited powers and have to report into someone with a bigger title. This hampers positive change for a firm and means that making changes across the enterprise will likely be Herculean tasks.
But I refuse to give up hope especially when it looks as if we’re approaching a point of no return with these so-called disruptive technologies.
My hope is that a majority of firms will be getting onboard with IT systems that will help them leapfrog and more. I think that the key is in finding the efficiencies that are inherent in these shiny new technologies.
Ironically, the old-fashioned combination of cost-savings, greater ROI, far more elegant workflows, risk mitigation, fewer human errors, and much better bottom lines may save the day for the technologies fast approaching on the horizon.
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