Thursday, December 10, 2020
In an increasingly digital and automated industry, we must consider if full service financial institutions (such as J.P. Morgan and other large Banks) will continue to provide an end-to-end user-experiences for its Clients - a continuation of the “white-glove” service of institutions’ heritage. Or, will a more interconnected financial landscape lead to the financial institution being removed from the end-to-end experience, and instead focused on a core set of functions and components that live within an independent and de-centralized ecosystem? In more colloquial terms - Will the Digital Bank of tomorrow be more like Apple (providing the end-to-end ecosystem across the user experience), or Microsoft (steadily focusing on platform-as-a-service offerings across both native and competitive ecosystems)?
For market constituents in the financial services industry, it is neither common nor advisable to service all financial functions from a single institution. Given this inherent fragmentation, it’s unlikely that a single institution can provide the end-to-end user experience regardless of ability to innovate and compete in the future. With acceptance that the digital experience, as competitive as it can be, is unlikely to be exclusive amongst market participants, the industry will invariably head toward the aggregation and commoditization of business functions.
Not only is the nature of the global capital markets landscape changing, so is the nature of market participants. For example, according to a 2018 report by Greenwich Associates, technology spending is quickly increasing its share of overall buy-side trading desk budgets, with a 20% shift in the past three years alone. According to the report, firms are clamoring to access electronic trading venues, and a big driver for increased technology-spend is the need for more relevant data and the analytics to put that data to work. This trend is across all product areas, and is a “secular trend” unlikely to end soon.
The role of the Technologist at our Clients, once a supporting function to a traditional front-office discipline, is now a key constituency that must be satisfied in delivering digital solutions. The chief technology officer, head of digital, or data-scientist is today making decisions about platform-connectivity that hold the keys to commercial objectives in the future. The Technologist’s user-experience is the Client experience, for Technologists are the “creators” of digital solutions.
Financial Services organizations must provide a curated experience to these “creators” of digital-solutions, and to promote the connectivity required to be a beneficiary of the emerging competitive landscape. Standards, policy, and process for providing technical services should be structured as components of the overall client-experience.
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