Technology is galloping ahead. Time for IT to play catch up.
“I don’t like people and things”.
The time: ten years ago.
The place: tier 1 investment bank.
The context: a joke about how we all ended up working in financial services IT.
The moment of truth: for a time, software engineers were expected to be introverted perfectionists who disliked the messiness of human life, the emotional detours and non-rational parameters of human decision-making.
This particular person had an appreciation of art and beauty but was not particularly interested in the mechanics of the physical world. But software? Ah, software was beautiful. Rational. Neat. Impervious to emotional variation.
Fast forward to today, when the business folks keep saying – with a touch of wistfulness – “whaddya know… the geek inherited the earth, after all”. Maybe. But not that geek.
The digital era has come fully loaded with its own economics paradigm (sharing, coalescing, tandem growth), a different organisational position (human centric, non-hierarchical, saturated and interrupted) and a whole host of assumptions about human nature, society and value vs values that leave both the hard-nosed banker and the bona fide geek of yesteryear deeply uncomfortable.
This is not meant to be happening.
What is all this emotional engagement with users? The FS professional and their IT partners, while never historically the best of friends were at least united in having settled into clinical, numbers-and-facts world. And now this. Kids in jeans. Playful design. Accessible language. Human-sized, human-centred interactions. With the technology to deliver it and the skill to prove it.
This was not meant to happen. But it has.
So here are the three most important technology trends for the year ahead – and the paradigm shift they represent. Solving for the technical talent gap will be the easier part. Getting to the place where the purpose and aim of the shift becomes comfortable will be the challenge – but brings its own reward.
From fortress mentality to deliberate dependency
Banks collaborate. Swift is a great example of that in action. But that collaboration comes with a clear understanding that ultimately, if they could do it all without each other and clinch the market, they would. They rely on each other but never depend on each other. Systemically, even core services are divided and safeguard against the dreaded dependency.
Enter left the API economy.
Uber did not build a proprietary geolocation capability. Tinder did not build a proprietary identity validation function. Revolut did not build a bank account. They were all quicker to market and much more operationally efficient because they were willing to borrow or lease their infrastructure, share the client footfall and base their success on the success of others. They weren’t beholden to notions of building and maintaining their own core services.
Repeat quietly to yourself until it sinks in. Because you can hire as many fresh-faced, API-savvy digital natives as your building can hold, but until your leadership understands the mechanics of dependency, pricing an API call will elude you.
From a knowledge economy of experts to a learning dynamic
Over the years, I have sat in many a boardroom where ‘data’ was shorthand for a management information screen, usually in garish green, purple and orange pie charts. It is static, it is backward looking. It is staggeringly uninformative. It gives a temperature check of trends, performance and delivery but no-one looks at it to learn, they cast an expert eye at it to confirm that “yes, all is well”.
And now we tell all these experts that a series of clever technologies and some creative ways of showcasing fresh and relevant information will allow us to learn things about what we do that are not currently visible. How through the use of new analytic techniques and visualizations of multiple data sets we can challenge our assumptions and constantly refine our operations and tactics in line with our strategy. We can become smarter every day.
Learn something and improve something, every day. That fluidity, the humility of constantly questioning and learning, the agility to engage with fresh perspective and instigate fresh thought when looking at a familiar terrain, that mind-set is weaponised by technology. But no amount of data scientist hires will magic the transition from being the boss because of what you know, to being the boss because of your ability to constantly learn.
Trust, faith and the ultimate truth
The capital markets world loosely operates on a series of assumptions hugely padded with protective measures:
- Your people will make mistakes. So have a thousand checks around each process, several layers of sign-offs, reconciliations, post reconciliations and a few recall processes for good measure.
- Your clients understand, because their people make mistakes too. In fact, you can trust your peers, clients and (perversely) competitors, because you are all on the same boat. But can you trust everyone else?
- Don’t risk it. A black-box set-up ensures that information remains safe, proprietary (in case that turns out to be useful) and invisible (which spares everyone embarrassment in case of mistakes and allows ‘activity’ to be ‘valued’ and priced in terms of its impact on the client and not always the effort it entails).
This new world of digital connectivity changes the rules. Black boxes are no longer acceptable; ‘value’ as perceived by the client needs to align with the value extracted by the provider and the enhanced visibility changes the conversation. Clients used to a digital experience in their day-to-day lives and what that means in terms of efficiency, design and cost, will no longer see value in what banks define, and charge a premium for, as a value-added service.
Mistakes are human but transparency is divine, so rather than having no trust in your people, a lot of faith in your peers’ understanding and an arms-length approach to information sharing, the new world says: secure your assets with the most reliable identity protection, encryption and cyber security genius can muster and money can buy. Use the huge suite of technical capability at your disposal to minimise manual intervention (and hence the chance of error), delays (and hence the need to trust between the moments of exchange) and multiple versions of the truth (yes, that is a distributed ledger reference) and accept that ops are not striving for perfection or sainthood. Mistakes will occur, people will cause mischief. Manage to minimising that. Not hiding it.
The technology is at our disposal. Real. Robust. Relevant.
It has come with its new aesthetic, economic models and philosophy about the meaning of value. It is not going away. And the people who thought economics was theirs to define and aesthetic and values were “hobbies” have a lot of catching up to do. That catching up is your hottest technology trend of 2017.
By Leda Glyptis, director at Sapient Global Markets. She was previously head of innovation for BNY Mellon in EMEA.