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TRADING ROOMS OF THE FUTURE – IPC’S OUTLOOK FOR 2021

By Craig Campestre, Chief Revenue Officer, IPC

 

The Covid-19 pandemic did not just affect our clients. As soon as the virus started to spread around the world and lockdowns started to come into place, it became apparent here at IPC that we would need to implement our own business continuity plan and work from home strategies. All of this had to take place on an incredibly tight timescale and to an unprecedented extent. We had to react and adapt faster than ever before in order to help our clients prepare for lockdown. There was a need to manage supply chains, gather client feedback, and produce updates for our products with increased levels of accuracy, clarity, and efficiency.

During these challenging times, market participants have done an excellent job in moving quickly to make sure that their systems remain stable and resilient. The fact that the markets have remained open throughout this period is a testament to their great work.

Now though, it is time for us all to look ahead and see what the future holds for the trading industry.

 

How the industry is evolving

Prior to the pandemic, the trading room was starting to change. Regulatory requirements such as MiFID II, a piece of legislative framework designed to regulate financial markets and improve protections for investors, had resulted in the transformation of workflows on the trading floor. There is now a real necessity for telephonic communications to be integrated with trading technology in order to gain actionable insights from conversations.

We have also noticed that a new trend has emerged – traders are now starting to consume multiple applications from just one terminal. As a result of this, data is being shared organically between the applications.

Trading desks are also striving for increased productivity. Using AI-powered natural language processing (NLP) tools, trading firms are able to strive for swifter execution, better communications, and smooth-running reporting processes and settlements. All in all, this leads to an overall increase in efficiency.

Additionally, there are numerous areas across trading floors where NLP will be used in the coming years. It will enable traders to voice populate applications and forms on their desktops, while NLP will also allow for heads of trading desks to search through structured sets of data, enabling them to reconstruct trades instead of having to manually listen to numerous audio files.

With hundreds of millions of voice quotes being generated around the world every day, it is vital that this market data is unlocked, and that future trading floors are equipped with the necessary voice communication tools to allow them to conduct better analysis and automate their workflows.

 

Global growth and the FX market

Traditional trading hubs, such as the US, the UK, Japan and Hong Kong are still facilitating most of the foreign exchange (FX) market trading. However, in recent years trading hubs from emerging markets are starting to come to the fore. For example, China is making great inroads, evidenced by the country being ranked as the 8th largest FX trading center, per the 2019 BIS triennial survey.

The Asia-Pacific region has long been viewed as a growing market. Even before the pandemic, trading firms operating in this region had already faced a crisis and were impacted by a major geopolitical event – the 2019-20 Hong Kong protests. The protests meant that traders in the region were forced to adjust their trading activities and working practices. As such, these trading firms were able to use the experience gained from having to suddenly pivot and roll out their business continuity plans to help financial companies around the rest of the world when lockdowns came into effect due to the pandemic.

Adding to this, it is important to consider the impact that current geopolitical events may have on global growth over the coming years. Brexit and the increased economic tension between China and the US, as well as Covid-19, all have the potential to have a major impact on global growth. Due to these geopolitical events, we may observe a shift in the location of trading activities, which may begin taking place in locations that are, presently, not thought of as global trading hubs.

 

How IPC can help

The global markets are continuously changing and evolving. As such, it is vital for market participants to remain on the edge of innovation.

Here at IPC, we are constantly assessing what needs to be done to enable the development of the trading room of the future. This includes bringing voice communication services fully into electronic trading environments. By doing this, it will allow for greater integration with data sources, trading technologies and electronic workflows. In places where we have voice products that function using legacy infrastructure, we are in the process of modernizing the underlying technologies.

 

In summary

It is clear to see that the trading industry was in the midst of an evolution prior to the pandemic. However, this transformation has definitely been accelerated by the events of the past year, with companies having to quickly adapt to the ever-changing circumstances. This process is likely to continue into 2021 and beyond, with new and improved products continuing to enter the marketplace. Looking to the future, it is vital that financial market participants maintain their resilience and maintain their innovative edge.

 

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Finance

FORECASTING FINTECH IN 2021

Fady Abdel-Nour, Global Head of Investments and M&A at PayU

 

2020 will go down in history as a pivotal time for the world of digital payments. In 2021, what may have until recently felt new, exciting and progressive will fast become the norm. And so it should.

Financial institutions, central banks, fintechs and payments providers have all had no option but to move operations online, quickly. Finding digital transformation is no longer a topic of discussion; digital is the new business operating model. Across the market we’re seeing how varying digital strategies are determining who’s thriving and who’s merely surviving. Now that the market has established a baseline for digital platforms, I believe we’ll see significant strides made in payments innovation.

As such, digital financial services are now mainstream – fact. Over the past year we saw them surge to fruition, driven by consumer demand. This presented a challenge to those both in the process of digital transformation, and those already transformed. It tested organisations on their abilities to scale at pace and the reliability of their technology. At PayU, we’ve always been a digital-first organisation but we still had to test our ability to serve the rise in demand for digital payments. I’m proud to say we met the challenge. For example, some of the e-shops we serve saw 500-1000% revenue growth in April and May compared to the same periods less than 12 months prior.

Robust technological infrastructure will undoubtedly become the standard moving forward. PayU recognises this, and as both a global fintech investor and a payments operator, our aim is to set the pace in high-growth markets, not just keep it. I’m certain this year we’ll see financial services players look to the next stage of innovation and growth. On top of this, one lesson I think we’ve learnt collectively is that change can happen much faster than previously envisaged. In learning this, the growth potential in high-growth markets becomes far more compelling to fintechs entering the market. As a result, in 2021 I expect we’ll see more Mergers & Acquisitions in unsaturated regions.

Something else I expect we’ll see within our markets this year is the roll out of central bank digital currencies (CBDCs). Digital currency more broadly will start to see real use cases emerge, and this is what I’m most excited about. The discussion around crypto has been going on for too long, with not enough appreciation for the immense potential it has for financial inclusion and global connectivity. The pace of innovation within this market has changed now though. Initiatives like Diem, for example, are showing how blockchain could democratise and decentralise money, taking us a considerable step closer to truly accessible financial services for all.

I’ve always been a strong advocate for the financial services industry working closely with regulators and governments to drive innovation and inclusion. Throughout 2020 these organisations proved that they are also just as capable of adapting quickly. As such, I believe 2020 has established a significantly different pace for innovation, and over the next decade we will see this continue apace.

 

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Business

TAPPING INTO THE RIGHT MINDS

David Holden-White, co-founder and managing director, techspert.io

 

The world is awash with information. Analyst house IDC estimated that more than 59 zettabytes of data would be created, captured, copied and consumed in 2020, and that the amount of data created over the next three years will be more than what was created in the past 30. The boom in consumer technology and the rapid improvement in mobile connectivity has meant that the 48% of the globe that owns a smartphone has near instant access to all the digitised, publicly available information in the world in their pocket.

 

A world overloaded by information

It’s no surprise that people talk of information overload, or how much it impacts productivity. It’s not new either. A 2012 study from McKinsey & Co highlighted that nearly a fifth of professionals’ time was spent searching for and gathering information, half of the time they spent undertaking role-specific tasks. This is only likely to have increased as we’ve become more dependent on digital tools and services.

On top of that is the realisation that, thanks to social media, we’re living in a time when anyone can be an influencer or thought leader if they shout loud enough. It doesn’t matter whether you’re pushing trainers or cloud computing, whether your audience is a broad spectrum of consumers or a niche group of B2B buyers; the tools and resources are pretty much freely available to build a profile and push your message out there.

David Holden-White

The result is that it’s becoming increasingly hard to find the value amongst vast and accelerating volumes of online data and noise, and to use that data to make accurate, effective decisions.

This is something we need to be able to do. We’re all expected to work faster, to make better decisions more quickly. The pandemic showed that certain changes don’t need five committees, two working groups and a proof of concept to take place before decisions can be rubber stamped. At the same time, no matter what industry you work in, there will be competitors who are more agile, more flexible, and seem to be much better at making decisions and capitalising on opportunities.

Yet those decisions still need to be backed by evidence, by irrefutable knowledge. What’s more, there’s only so much data can give us. We need the insights stored in the minds of true experts, with lived experiences of the particular problems, markets and technologies in question. In accessing this, we can develop a decision-making edge in businesses that competitors don’t have, that can be used to drive entrance into new markets, or for winning investment decisions.

 

Limiting risk in investment decisions

As we all know, investments are inherently risk-related, so, anyone making such a decision will do all they can to minimise their risk exposure, especially in volatile post-covid markets.

To do that requires being able to identify, consume and process information quickly. Investment opportunities, particularly in industries with significant growth capacity, come around quickly and get snapped up fast.

Those decisions will incorporate analysing and drawing insights from raw data, using publicly available and analyst-produced information. But there is also an opportunity to draw on human insights, from leading experts in relevant fields, to get a sense of the story that 0s and 1s can’t properly tell yet. Tapping into the right minds  is essential to informing investment decision-making in 2021.

In an ever-growing haystack of information, the challenge is finding them quickly. Plus, once they are found, there’s a tendency to keep using them, or to use them as a gateway to others in their network. While there’s nothing inherently wrong with this approach, it leaves investors exposed to a lack of diversity in thought that makes getting to an unbiased view of the world impossible. At the same time, casting their net wide and finding lots of experts is resource and time-intensive, at a point when time is one commodity in short supply.

So, what’s the solution? Ironically, given that the challenge is bringing the right human insight into the process, the answer could lie in technology, specifically artificial intelligence (AI). AI-powered platforms can take a request for expertise and run searches through all available published and credible material to recommend the most appropriate experts for the project in question.

It’s true that there are already services that recommend experts, but they are heavily manual and therefore slow and imprecise. It’s also true, there are also both negative and positive connotations being attached to AI. No technology is without its flaws, and if investors were relying on the AI platform itself to provide expertise then there would be cause for concern. Services that provide access to the experts themselves, however, are providing a fast way through the noise and data – it’s a car to the destination, not the destination itself. Once investors and experts are connected, the former has access to the relevant insight the latter holds in their heads. What AI has done is rapidly scan through millions of people of talent to highlight the relevant knowledge holders with pin-point accuracy.

 

Using technology to highlight the best human knowledge

Using an AI technology platform to find the most relevant human is a way of taking a resource-consuming process and finding what’s needed in a thousandth of the time. In that way, investors can get fast access to the human insight they need to make the best decisions,  allowing them to capitalise on opportunities and not miss the next big growth opportunity.

 

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