January 2016: Creeping Along the Continuum

In many respects, the financial technology realm and the factors that influence it is something of a continuum, given that it is indeed a continuous series or whole with little or no discernible division into discrete parts. It has no identifiable start or end points and it certainly isn’t governed by quarters or years that might represent a natural break between industry themes or trends.  

This occurred to me recently, just before we broke for the holidays, as my inbox filled with mail either offering insight from industry commentators about the “big trends” for 2016, or with requests from PR contacts asking what Waters would be covering in, say, six months’ time and whether I had any thoughts about what the major themes of 2016 might be.

I always derive a smidgeon of perverse pleasure by admitting that if I knew what the industry would be abuzz with in six months’ time, I’d leave my job as a journalist and take to the road as a clairvoyant or a card player. The truth of the matter is that no one really has a foggiest idea what the capital markets and the fintech industry serving those markets have in store for the year ahead, especially not the consultants or analysts who swear blindly that they have their fingers on the industry’s pulse. 

Here’s a case in point: In the run-up to the holidays, I had two separate coffee meetings with consultants on consecutive days, both of whom are hugely experienced and whose judgement I trust and value. Both were convinced that this year the European buy-side industry is likely to see a spate of extensive technology replacement programs, although that’s about the extent of their agreement: One was referring to the front office, which he said was concerned with improving decision support and advanced execution tools, while the other believed that the back office would be the area of focus, given that the front office had long been “done and dusted” and that the only place left for buy-side firms to improve their efficiencies and economies of scale is the back office. 

Obviously, the buy side is now in what we might call the “Solvency II dispensation”, given that the directive came into force on January I this year, and yes, we’re going to hear a lot about it—along with other significant data management, reporting and capital adequacy issues—during the course of this year. But what else might transpire? I’m not even going to pretend to know, but what I am fairly certain of is that companies like Symphony and Algomi will continue to upset the incumbent hierarchy. And that is something to look forward to.