This was our second consecutive year sponsoring the Waters Technology European Trading Architecture Summit (ETAS), which promised to look at hot topics such as artificial intelligence, blockchain technologies and MiFID II, and there seemed to be a definite focus on peers from the industry sharing their experiences, rather than vendors showcasing their wares.

On the agenda: Integration and Innovation

First up was Stewart Carmichael, CTO at Schroders, who gave a keynote address on how six months ago he started an ambitious Agile delivery adoption programme, which is on track for completion by the end of Q1 2017.

He admitted they’d not consider the programme mature at this point, but the foundations are in place to continue the journey through coaching etc. The benefits of Agile have been well documented (faster, cheaper, and a better standard of delivery), but there were a couple of ‘side-benefits’ I found interesting:

  1. The team learned to invest in themselves as a department, i.e. they could justify allocating budget to such things as automation tools to enable this transformation, rather than every line item being attributed to ‘the business’. In fact, such an investment has notably de-risked tasks previously considered high risk when manual
  2. There's been a huge improvement in collaborative working practices, not just in IT but across departments and offices.

The hardest part was getting the global distributed development model right; apparently you still need to get everyone together in the same room every so often - every three months to be exact!

The first of many panels asked what was driving technology agendas. Ian Alderton, ex-CIO, Bank of Tokyo Mitsubishi, found simple innovations from other sectors inspiring, such as Netflix’s chaos monkey, that randomly shuts down servers so that failover procedures are strong enough to ensure no interruption of service to the box set bingers among us.

Chris Donan, CTO, Tyler Capital, made it even simpler, stating they’d employed a policy of ‘no meeting Thursdays’! And Joerg Guenther, CTO, Northern Trust, coined a phrase I think most will take away from the conference - the term proof of value over proof of concept.

His advice was also pretty simple - work with partners and mix up the teams with your own staff and external help, as well as taking any opportunities to let your staff work at their locations. This stimulates further learning useful to your organisation. Stewart also noted that smaller partners were likely to be able to innovate faster than larger competitors.

the rise of the machines

The second panel discussed machine learning. All agreed this doesn’t necessarily mean automating roles and putting people out of jobs. It could actually support revenue growth, although examples of this are hard to find! The risks in using machine learning to automate any sort of task were debated, but the general consensus was that it’s no different to deploying software with bugs, but at least this technology should be able to learn and correct itself. It appeared that a lot of exploratory work has started across the institutions in the room, but 2017 needs to be the year the successful experiments officially make it into production.

Panel three addressed the possibility of innovation in trading architectures. Richard Bell of BNPP was quick to point out that first you need to find a problem to fix, and innovate around that, the implication being - don’t get seduced by a new technology and crowbar it into your strategy if you don’t need it. Again, the idea of moving people around to bring knowledge to different teams was discussed, and mixing up skill sets too, such as C++ low latency developers working closely with database programmers, which encourages different ways of delivering technology.

The last panel before lunch, which featured Alpesh Doshi of Redcliff Capital, was moderated by David Masters of Societe Generale, and grappled with front office integration and interoperability. It was suggested that, in an ideal world, data should be independent of platform and contained uniformly in its own layer, to be accessed by whatever system or function needs it.

All concurred this would be painful and costly, but rethinking architecture in this way may lead to greater agility when accommodating change driven by new regulations or innovation. However, it could be proposed that regulations and clients themselves increasingly dictate the structure that data must take. In that regard, Tony Chau of UBS likened his job these days to that of a plumber; hooking up both client and internal systems, and the data held therein. However, providing the best service for users across the full life cycle of those services was where UBS sees its USP.

Transformation, collaboration and regulation

Post-lunch, Joerg was back on stage to present on A New Leadership Approach for transformation and collaboration. He was at pains to point out that it’s ok to admit you need to partner with someone else because you need something they have, and vice versa. The combination of skill sets (or symbiosis to use his term) allows you to learn from each other. Northern Trust has invested and ring fenced a lot of budget in its transformation and innovation agenda, including setting up an innovation lab in Limerick.

Most banks have done this in some way, and when some participants challenged the ideal of hiring young technical hipsters to work in a business they have no experience in, Joerg was adamant they could not hire enough millennials and the vast majority contribute well.

The fifth panel was Streamlining your Data Management Strategy, and the practicality of an ‘independent data layer’ was challenged in the context of a larger bank. Who would own it if it were across departments? Who would have the access controls? Is this really just about making the data itself easier to use?

MiFID II was the next topic on the agenda, and an in-room survey on screen was quite revealing as to the City’s appetite towards addressing this impending challenge. When asked, “Did the postponement of MiFID II to January 2018 delay or stop your firm’s implementation program, or did it make no difference because it had not begun?” the startling response was:

  • Delayed - 49 per cent
  • Not started - 49 per cent
  • Stopped - two per cent

Ayaz Haji of Goldman Sachs was quick to point out that the regulator’s inability to give clear requirements was the main reason behind the delay and therefore lack of significant progress anywhere. The follow up question, “Which area of MiFID II/MiFIR is your biggest challenge?” the clear leader at 58 per cent was ‘Understanding the requirements’. Either way, it looks like a lot of firms will have to work hard, with a lot of help from the regulators, on getting this sorted in 2017!

The penultimate agenda item was Blockchain and Distributed Ledgers. Dr Lee Braine from Barclays CTO office confirmed he'd seen lots of POCs (or POVs!) exploring all sorts of opportunities this year, but, as he saw it, the use cases need to be properly refined next year, and the motivator seems to be increasing operational efficiency. Neil Pachen, CTO, Atlanta Wealth, thinks it represents a tangible solution towards reducing credit risk, although Justin Chapman of Northern Trust spoke of a continued need for collaboration across multiple parties (both tech and business) to realise long term gains.

An ongoing discussion

The final activity for the day was a champagne round table session, discussing topics such as women in technology, and Artificial Intelligence and automation. In talking to a few attendees, the overall feeling from the day was there were no real revelations, but it was a good opportunity to share high level ideas and benchmark general progress among peers.