The More Things Change

With just about anything, it can be said that everything is always changing, yet it also, in a lot of ways, stays the same. It's now 10 years since Heidi Miller of JP Morgan made what is still remembered as a landmark speech at the Sibos conference held in Atlanta, pointedly criticizing the financial services industry for lagging on technology and processes.

This week, Suresh Kumar, CIO at BNY Mellon, addressing the North American Financial Information Summit (Nafis) in New York, noted that efforts to make business digital are "something we've been at for a long time in various forms."

So what has been missing and what still needs to be done ... if the industry is no longer going to be taking more time to process international transactions, settle them and confirm all the data than it would for one person to sail across the Atlantic themselves to conduct the transaction by hand, as Miller described it?

Kumar said it requires more than just adding a layer of innovation on the client interface, without really changing the underlying technology, infrastructure and applications. "That's no longer sufficient," he said. "You have to think about product and service innovation, and the distribution transformation."

Short of spending $100 million or more on a three-year project, which is an unlikely proposition for even the largest firms, firms need a "single source of truth" to access their data from any kind of device in a consistent way, Kumar explained.

BNY Mellon developed its Instrument Platform, an open source-based platform-as-a-service style offering that removed the need for every unit within the firm to create proofs of concepts and set up their own siloed technologies, according to Kumar. It's their effort to create an innovative culture and learn using the data the firm has, he explained.

The US Financial Industry Regulatory Authority (Finra), as its CIO, Steve Randich, told Nafis attendees, has redesigned its risk management platform. That re-design, if successful, could solve the exact issue Miller cited at Sibos all those years ago. Finra's Comprehensive Automated Risk Data System (Cards) collects post-clearing trade data to automate and improve efficiency of its interactions with broker-dealers and members for the purpose of addressing issues with data.

In addition, Finra's revised Consolidated Audit Trail (CAT) system, expected to roll out in 2015, will collect account-level information for the whole trade lifecycle, in an effort to prevent a repeat of the 2010 "flash crash," in which all the speeded-up trading and processing thereof overloaded systems.

So, 10 years later, with efforts such as BNY Mellon's Instrument Platform and Finra's Cards and CAT in evidence, it could be said that change is finally here, in response to the need highlighted by Miller and others. But are the industry's overall processes still the same as they ever were, beneath new interfaces and initiatives? If you think so, or can make the case that they have changed, please let us know in our LinkedIn discussion group.