CEO of Contineo, Mark Munoz, comments on how the year 2016 and beyond will see much more connectivity, not just between banks but also between different parts of the same bank
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The year 2015 was a big year for structured products. Our industry, reliant so long on 1970s technology (email and Excel) to trade, finally took some meaningful strides into the 21st century. Multi-issuer platforms like Contineo saw serious traction for the first time.
This year and beyond will see much more connectivity. Not just between banks, but also between different parts of the same bank. The inefficiencies that have been an accepted part of doing private banking business for so long will begin to disappear as proprietary innovation programs and new technology start-ups target wasteful practises and systems.
In 2015, about 350 financial technology companies pop into existence, all targeting the wealth management sector and many specific to private banking. This proliferation is a good indication of the potential for improving efficiency. The ‘fintech’ trend will continue in the coming months, but we will see the beginning of consolidation as good ideas and solutions are snapped up by bigger players.
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By GlobalDataData will play an increasingly important role as well. Beginning to track trading flows and performance from the macro right down to the individual level will allow banks, for the first time, to really understand their performance both internally and against their peers. The ‘black hole of trading’ will be illuminated as automation brings with it the ability to benchmark, measure, track and improve upon trading performance. Banks will also be able to measure in super-fine detail the true impacts of any changes they make, both from technology and human perspectives.
The availability of data and the ability to interpret it will create impetus for meaningful change that will improve the industry for both banks and their clients. I believe this time next year we will see an industry well on the way to being more efficient, with reduced costs and an even better understanding of itself.
Over the past couple of years, private banks have increasingly found themselves having to build connections to multiple platforms, each with their own protocols and unique requirements. The industry has no standard ‘language’, and connections are expensive to create and require ongoing maintenance. In an environment where reducing cost is still a core concern, spending lots of money on multiple connections is untenable.
Our industry, realising this, began coming together seriously this year to think collectively about better ways to collaborate. Contineo was born from one such conversation, but there are others going on around ways to commoditise the business processes that are common to all banks and that don’t provide a significant point of difference at the client level, yet cost the industry overall colossal sums of money every year.
The wisdom of owning an entire value chain has been questioned over recent years and industry changes based on changing attitudes around this will only accelerate. Disintermediation will be more of a buzz word – and a reality. Vertically integrated companies will be increasingly displaced by agile, horizontally integrated partnership models that can respond far more quickly to client and market needs. This horizontal approach will allow for faster scaling, and products that can appeal to a broader range to potential clients, as overheads are lower and costs can be controlled more easily.
