“The two results of a proof of concept we conducted show that by using AI we could improve the hit ratio and lead to higher trading revenues while lowering costs,” Takumi Kitamura, chief financial officer at Nomura Holdings said on a conference call announcing the firm’s first quarter results in July. “[W}ith advances in digitisation, spreads will become thinner, but with a higher hit ratio we will require less warehousing and ensure revenue levels.”
Leading the charge on Nomura’s EMEA technology strategy is Nick Wadge, who was appointed to the role in June 2016. We caught up with Wadge, to discuss how the bank is looking to leverage machine learning in its trading business, the future of wholesale banking, and new technologies impacting the industry.
What do you see is causing concern in the industry at the moment? And how do you see that concern being overcome?
The democratisation of technology enables business users to more easily leverage their data through good self-service tools and analytics; however, it is not without challenges. We need to ensure the same controls which apply to IT departments are also applied to business users, without adversely affecting time-to-market. IT departments need to be positioned not only as service providers but also as trusted advisors to the business to ensure the right technology choices are being made in the right way.
Earlier this year the bank said it was deploying technology initiatives such as leveraging the application of machine learning in its trading business. What does that look like currently, and for the future?
Amongst a number of other initiatives, our wholesale digital office is using machine learning and data science techniques to provide automated price formation and hedging strategies for European government bonds. In addition, we are looking at how machine learning and distributed ledger technologies can provide efficiencies and reduction in risk in our back and middle office functions.
Wholesale banking appears to be experiencing significant structural change. What areas of wholesale banking do you see as being particularly ripe for technology adoption?
Wholesale banking is not immune from disruption by any means and we need to continue to innovate and leverage our data and technology to meet client expectations. Even in areas of banking which have traditionally been relationship-based, there is tremendous scope to use technology to increase opportunities and share of the wallet.
What excites you about your role?
The role is hugely challenging, not least because of the rapidly changing technology landscape and the increasing regulatory pressure under which we work. However, this is exactly what makes the role exciting. I can be looking at strategic technology architectures one day and diversity and inclusion opportunities the next and am extremely proud to have co-sponsored our recent Returners’ programme within EMEA Technology.
I’m also lucky enough to lead a number of initiatives which aim to change the culture of the organisation, these include our hackathons, Tech Fayres and Digital IQ academy and education series. These initiatives showcase the talents of our brilliant teams and provide opportunities for junior staff to manage these high-profile events.
What emerging technologies do you think are providing the most value at the moment and which ones do you see making the most impact in the future?
Cloud technologies in the form of SaaS, PaaS and IaaS provide the most accessible value, primarily because the benefits and path to adoption are well understood. Artificial intelligence and machine learning leverage our unique data to help inform decision-making and will provide more value as the techniques become more embedded - particularly as the democratisation of technology I mentioned earlier starts to take hold. Distributed ledger technologies also have the potential to disrupt entrenched processes (particularly trust-based processes), providing greater transparency, cleaner audits and higher levels of security.