As 2011 draws to a close, it seems the economic crisis is set to continue, with the unreliability of the euro only exacerbating an already difficult financial landscape. This economic uncertainty means that the future is increasingly difficult to predict, not only in the financial services industry but across a variety of sectors. Businesses must now adapt to a new way of operating, developing ways in which they can react swiftly to industry changes that are outside of their control. In essence, the crisis of 2008 and beyond has highlighted the pitfalls of trying to predict industry trends, so as we enter another year many will be wondering how the changes we have seen in financial services in 2011 will affect the industry in the longer term.
With ever present pressure on banks to be innovative and respond to evolving customer needs, banks need to be flexible and agile enough to cope with change – enabling them to react quickly to it, rather than attempting the impossible task of speculating on future measures. Of course, broadly speaking these issues are prevalent not only in financial services but across the spectrum of modern industry, with the fast-paced fashion industry a prime example. Just as banks need to respond to government and customer demands, retailers are bound by customer tastes, making the need to stay one step ahead of the game more important than ever. Who’s to know when the next Lady Gaga will storm in and make oversized head gear a must? Successful fashion suppliers therefore have a flexible supply chain in place that can service this new and increasing demand, as should banks.
This is easier said than done, especially as many past systems were built for a period when the future could be forecasted, with the technology now serving a purpose which is less useful for modern banking. Moreover, even if factors come together to enable a business to predict a customer trend, it is likely that competitors will see this pattern too. The best alternative is to build market share and invest in production systems that enable a business to build volumes quicker than any competitor. A specifically made system can become redundant if the market changes quickly, which is all too often the case.
In 2012, forward thinking banks that make wise investment decisions, choosing adaptable technology, will stand to gain. For example, solutions such as Quartet FS’ ActivePivot analytics platform are not tied to a specific asset class, reporting or decision support function. This enables banks and financial institutions to use it across a multitude of different businesses including, risk, trading, arbitrage, equity finance and counterparty credit risk. While technology alone is not a blanket solution to wider banking issues, such as reform, it is the solution to changes in customer demand. Real-time analytics and flexible technology solutions can ensure that the risk decisions being made are well informed and compliant, better positioning financial institutions to cope with the challenges of today’s volatile landscape.
Georges Bory is MD and co-founder of Quartet FS (activeviam.com). He brings 25 years of Capital Markets software experience to the company, having previously held the position of Managing Director of European Operations for Summit Systems SA.