As rallying cries go, “Build Back Better” takes some beating. Short, sharp, alliterative and containing an implicit and undeniable truth - that our post-pandemic future must improve on what went before - it’s a sentiment we can all get on board with. Writing a slogan, however, is the easy part.
The reality of delivering a better future in any sector is more challenging. Change - systemic, existential, environmental - is more difficult to achieve. I speak from experience. Despite holding senior management positions at major financial institutions, I found that driving change in large organisations can be a slow process.
Build back better? That’s certainly our aim at Ediphy Markets, even if CTO Dan Wild and I founded the company four years ago, in that now halcyon age before Covid19. If the need to reimagine capital markets was apparent in 2017, how much more so as we emerge from pandemic?
The challenge for our industry is two-fold. There is a need to streamline and automate inefficient manual processes and to advance another agenda resonating in the world beyond financial services: the call to “level up”. For capital markets, this means embracing fairness and compliance, transparency and democratisation, honesty and integrity.
While change is often complex and difficult, humanity, as a species, is equipped with three remarkable tools: innovation, inspiration and creativity. With many of the world’s economies having been sunk in recession and government stimulus a temporary solution, market institutions must apply every scintilla of imagination to drive the recovery.
We know it can be done. Payment APIs like Stripe helped facilitate the home shopping revolution that allowed populations under lockdown to purchase goods and retailers and manufacturers to survive. Microsoft Teams and Zoom, video conferencing technologies previously regarded as a substitute for face-to-face meetings, powered the home working revolution.
It’s too soon to judge the long-term significance, but the vast and expensive inefficiency of corporate infrastructure – everything from city-centre office space to expensive business flights – must have fallen beneath the spotlight of accountancy professionals and the boards to whom they report. If remote working works, who would go back?
Boohoo’s acquisition of Debenhams (and for its brand value, rather than its physical footprint) indicates an acceleration of the high street’s demise. While the outlets at the heart of our towns and cities arguably serve a broader purpose than retailing, the pros of tech-enabled home shopping seemingly outweigh the cons.
Homeworking and home shopping represent a creative approach to the challenges of lockdown, while the technologies that enabled both trends are obvious examples of innovation. Creative solutions should not be reserved for unprecedented circumstances, however. An institution’s failure to innovate, as has often been remarked, can result in its death.
Capital markets represent the most obvious case in point. I began my career in the aftermath of the ‘big bang’. That move from open outcry to screen-based trading has been followed by more recent revolutions, notably algorithmic trading and the new frontier of machine learning-enabled Artificial Intelligence. Automation is key.
At its best, innovation delivers simplification. The integration of payment APIs is a clear example. However, in capital markets, the technical complexity inspired by a focus on niche, best-of-breed solutions has created fragile orchestrations akin to the Mousetrap board game. Our holistic technology integrates every element of the execution process.
Simplification can be systemic, as well as technical. Too many processes in trading and asset management are manual and time-consuming, and there are often too many links in the value chain: entities that diminish returns while adding no real value. Full digitisation offers a path to a more efficient future.
The challenge at the heart of “build back better” is to make innovation, inspiration and creativity standard operating procedure. One of the most satisfying aspects of leading a fintech start-up is its agility. Innovation is not a “nice to have”. It is our advantage over competitors of vastly greater resource.
At Ediphy, the leap from inspiration to implementation is short. Granted, we enjoyed self-funded independence during the development of our platform’s core engine. But as we build use cases, our innovation loop has tightened significantly. My relationship with Dan, especially – CEO and CTO sharing the same technical vocabulary – has helped.
Incumbents are often criticised for their slow response to change. Having occupied the same seat as the smart, well-intentioned people attempting to drive change in these organisations, I understand the challenge. It can be difficult to replace the jet engine on a jumbo when the plane is in the air.
Innovation dictates that banks and asset managers must adopt alternatives to legacy architecture. Incumbents enjoy repeat business from a large, installed client base, but history tells us that the threat of agile challengers equipped with new mechanisms to provide the same service at a fraction of the price is real.
By ignoring the threat, companies risk ignoring the history of capitalism and the more recent history of Covid, creativity, and innovation. The pandemic’s death toll is, of course, appalling, but humanity’s response, from the speed with which vaccines have been developed to the fintech industry’s own solutions, has been humbling.
Now, as the UK emerges from its third lockdown, we will again enter a period in which anything seems possible, and nothing is off-limits. The phrase “new normal” was used with abandon as the first lockdown eased, but our industry and wider society resumed the old inefficiencies with depressing speed.
A year later, the appetite to “build back better” seems sharpened. Capital markets, especially - still trading like it's 1999 in many cases - must transform this energy into lasting change. Neither should we disregard the “levelling up” agenda. We must wholeheartedly embrace the spirit of fairness, transparency and democratisation.
At Ediphy, where we’re delivering our fully-digital, fully-integrated solution to our first customers, we’re ready to lead the change. The time has passed for inefficient practices, inadequate technology and grudging compliance. By embracing a wider appetite to “build back better” and “level up”, we can create a fairer, faster future.