“I’m not worried about the recent blips,” said an investment banker who asked not to be named, on the sidelines of last week’s Money20/20, in Las Vegas, when asked about the recent market tremors that have hit some of the larger US tech firms. “I ignore these stutters in the market unless I can find a single, justifiable reason for them that would suggest long-term problems,” he said. On October 24, the tech-heavy Nasdaq Composite tumbled 329 points – its third-worst drop since the turn of the century.
Others weren't feeling as bullish on the Strip. Jeff Parker, managing director for APAC, WorldFirst pointed out that the impact of the Great Recession was still being felt at banks, who have turned to the fintech market to help innovate. “We speak to a lot of the banks now and they’re definitely a lot more prepared to working with partners and try to fill gaps in their customer base,” he said.
Those very same banks are looking to smarten up their tech capabilities, but struggling, said Mikhail Sosonkin, a Russian hacker and security specialist. Over the past few years, financial institutions have been ramping up their security infrastructures, hiring hackers to try to challenge their systems. But culturally, hackers have no interest in working at banks. “A lot of hackers tend to have the mentality of wanting their own freedom. They want to have this uncontrolled aspect in their work and to be able to make their decisions themselves. If you work in a big corporate environment it’s hard to do that,” he said.
At Sibos in Sydney, the disjoint between financial services and technology was being underlined. “As an industry, there is a feeling that the digital revolution was missed somehow,” said Dr Stacey Jeffery, senior researcher at CWI. “Perhaps it’s best to think about how and why that happened and how you can get on board with the quantum revolution before it passes by.”
One of the technologies focusing much of the attention of many across financial services is blockchain – with banks, commodity traders and cross-border payments providers working out how to apply the technology. For BTCC CEO Bobby Lee, however, blockchain’s primary use case remains in cryptocurrencies. “I have come to the sad realisation that, in order for blockchain to be truly unique and different than databases, there is a huge limitation with what you can do with blockchain,” he said.
And the crypto debate continued, with Chris Larson, executive chairman and co-founder of Ripple saying US regulators have not dealt with the latest asset class – currency or commodity, depending on which side of the Atlantic you’re on – fairly or effectively. “I have to say there was a debacle with the industry lobbying over the last year or so specifically around securities.”
Fortunately for banks and other financial institutions, those leading the drive for better tech involvement in markets are looking to further push the agenda. Larson’s colleague, Marcus Treacher, was at Sibos, suggesting relations with big fintechs could prosper.
With that, perhaps synergies across markets will help drive efficiencies and allow participants to better control the right types of risk – and confidently enjoy patches of volatility.