From the mid-1980s to the mid-1990s, corporate and investment banks were a tremendous engine of technology innovation. Twenty-odd years ago, as a freshly graduated technologist, I decided to work on a trading floor because this was the place where I observed opportunities to have the best kit to play with and all the latest technology; to be able to build and roll into production systems in a matter of days, if not hours. In 2019, those heroic days are, unfortunately, long gone.
Within CIBs, technical debt has been accumulating for two decades to such an extent that changing anything is – at the same time – arduous, expensive and fraught with risks of major disruption. Not only must this technical debt be paid back eventually, but – more importantly – the backbone of a centuries-old industry must be brought into the 21st century.
Specifically, in 2019:
- Everything is Code – Agile development has become the norm (albeit often imperfectly adopted; going agile is not a licence for doing away with rigour and discipline). The DevOps and Open Source movements have extended these principles to the full software lifecycle. As such, software is now at a stage where, by leveraging recent cloud technologies, both the network and the hardware are turned into lines of code (SDN and SDI) that can be developed and provisioned with a couple of clicks.
- User Experience is at the Centre of Everything – Pioneered in the consumer sector, UX is now the cornerstone of all new digital platforms and applications. The breadth of a CIB’s service should be accessible from either desktop PCs, tablets or mobile devices, with a design that is optimised to each specific form-factor. Users should be able to move seamlessly from one device to another without losing any preference, data or updates on their latest actions. Users must be able to personalise their journeys to suit their own needs.
- Identifying & Adopting Innovation – Faced with the friction and the weight of legacy IT platforms, the overwhelming majority of CIBs are no longer able to create new technology despite the fact that their business relies evermore on technology innovation. Therefore, banks must put in place the human structure capable of spotting, validating and driving the adoption of new technologies that flourish outside of the wholesale banking sector. This can take many forms: from principal investment to partnerships and consortia; to protected spaces for staff to tray and experiment.
The days of big, DIY tech in investment banking are over. The discretionary change budgets are no longer available to fund it and, even if they were, there are so many layers of technologies that have sedimented into a thick crust that only small, incremental change can be managed. And, even if change was easy again, the brightest people required to invent a piece of new technology are no longer flocking to work in banks.
Instead, a technology ‘new dawn’ has begun within the consumer sector. GreySpark Partners believes that CIBs must forget about their pride and embrace the tenets of the digital age: agile, open, elastic, affordable and simple-to-use.
In the next and penultimate article in this series of 10, GreySpark will ask if there is any other alternative but decline to ‘digital.’
Delta-X: The Digital Maturity Index for Investment Banks – How Do you Measure Up?