Executives explored the present and future of fintech and how the financial-services workforce can prepare for disruption during a panel discussion at the Securities Industry and Financial Markets Association's Annual Meeting in Washington, D.C., on Tuesday.
The panelists discussed fintech’s role in areas including distributed-ledger technology, advanced natural language generation and derivatives-trading infrastructure.
Chris Church, chief business development officer of Digital Asset, said a great deal of hype surrounds distributed-ledger technology, but some platforms will be going into production as soon as next year. The Australian Securities Exchange could undertake the first large-scale implementation of the technology if it decides in December that it will replace its Clearing House Electronic Sub-register System, or CHESS, with a Digital Asset distributed ledger, Church said.
Kim Neuwirth, director of product management at Narrative Science, described her company’s advanced natural language generation program. A major area of growth at Narrative Science, she said, is compliance reporting in terms of narratives on suspicious activity as part of anti-money-laundering efforts, among other purposes. The technology offers full transparency into the the narratives that are produced, all the way back to the source data, she said.
Satya Pemmaraju, founder and CEO of Droit, which focuses on infrastructure for the trading of financial instruments including derivatives, said his company doesn’t find fintech challenges to be fundamentally technological, but that they largely stem from organizational issues such as how decision-making is handled across an institution and how a project is carried out. A big question is how to change the culture of large institutions with regard to technology for regulatory obligations, he said.
Adam Broun, chief operating officer of machine learning and data analytics firm Kensho, said regulation is used in financial-services as an “excuse not to do things and, frankly, as also a defense mechanism against startup insurgents from the West Coast.”
“Regulation is both a friend and an enemy to people who like things the way they are,” he said, adding that he encourages firms to “take a bit more risks than they are comfortable with.”
Church said engaging with regulators is important and that some, including the FCA, have created “sandboxes” for experimentation and de-risking of technology. Neuwirth said some regulators have shown a willingness to be early adopters of fintech, as well.
Church said that companies already working with distributed-ledger technology for cost savings and other benefits will gain further insight that, in five to 10 years, will help them build their own applications of the technology for revenue opportunities.
Neuwirth said language-generation technology will develop to give explanations in context regarding the factors behind quarterly performance, for example, allowing people to spend less time interpreting charts and graphs.
“Computers will truly think like humans,” she said.
Pemmaraju said the most sophisticated financial institutions will grow to see infrastructure and technology at the core of their business model, not as ancillary. In addition, they will increasingly be required to explain their decisions, not just say they followed an algorithm's suggestion or point to an audit trail, he said.
Advice for the workforce
Advancements in technology are leading humans to become dependent on technology to be successful, as computers can process vast quantities of data that humans can’t, Neuwirth said. In addition, the cost of implementing technology is decreasing, so workflow automation is becoming cost-effective, she said.
In light of these developments, the panelists discussed how financial-services employees can prepare themselves for the future.
Broun said the future of financial services will still involve people working as portfolio managers and advisers, but they will be "enabled with artificial intelligence that is drawing their attention to the things that they ... and their clients should care about."
Pemmaraju emphasized gaining cross-disciplinary skills and pursuing roles that add value across an institution rather than transactional jobs that exist in a silo.
Neuwirth recommended learning new skill sets, adding that “you don’t have to be a programmer — but understand the world in which you operate."