FIS Blog

From Brute Force to Intelligence: The Future of Sell-side


Craig Costigan | Tuesday, September 13, 2016

This week I was excited to get a sneak peek at our new survey on technology and the future of sell-side.

Starting with the big picture, an overwhelming 84 percent of the 464 sell-side executives that we surveyed said they expect increased automation to impact their business.

What does automation look like to these respondents? I believe they are thinking about machine intelligence and robotics – no, not actual robots. I’m talking about the use of big data, human expertise and heuristics to automate help calls, problem resolution and other areas that today are completely dependent on expertise.

Consider the amount of information that a credit card company knows about each of its customers. My provider knows more about me than most of my friends do: it knows where I am, what I buy, how much I spend and more. If you were to take similarly advanced levels of big data and heuristics and apply them to a bank’s sell-side transaction activity, for instance, some amazing things could happen. From better understanding of the transactions themselves to better timing and decision-making – just to name a few – the opportunities are endless.

And while the most natural setting for this type of automation may be in the front office (think algorithmic trading), we’re starting to see it in the back office with more intelligent matching algorithms and settlement workflows.

Blockchain – the latest buzzword – is tapping into that same interest. Blockchain is exciting because it deals with automation between companies, which is where most of the revolution will come. It’s not about saving money by improving internal processes, it’s about how to be more effective with your data and transaction relationships with third parties.

To put it simply, we’re moving from brute force automation to targeted, intelligent applications of it. And such automation will be transformative, just as we’ve seen in retail banking.

For example, 25 years ago, you had to go to a branch to perform a transaction. Then came ATMs – you had to walk to the bank, but you didn’t have to go inside. Now you can stay at home and do your banking from bed, if that’s your preference. As always, the next advancement lies in the gap between customers’ desires and providers’ interests. In the case of retail banking, if you use multiple banks and want to get a complete picture of your finances, you have to go outside your own bank to third-party providers. That’s a pain for customers and an opportunity for banks.

Equally dramatic changes have taken place on the sell-side. Reams of paper faxes and crude physical deliveries have become electronic functions. Still, a significant amount of manual entry, rekeying and (naturally) errors remain.

Just like retail customers, institutional clients want one interface across their partners, not one per bank. The undiscovered territory is the land between sell-side banks and between sell-side banks and their customers. That’s where the most impactful investments will be made and where you can truly change the business model in a way that will advantage you.

Do you think automation is reshaping your business?

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Tagged in: Banking Automation, Banking Technology, Blockchain, Machine Intelligence

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