Making digital transformation more than a buzzword through the lens of a technologist

As the era of digital transformation continues to revolutionize every industry from healthcare to banking, the impacts on niche market sectors like securities finance can be harder to parse–but just as transformative. What are the key impacts of the new digital age on securities finance? It’s a question that technologists in sec finance must answer–but it’s nearly impossible to scratch the surface without agreeing to a common definition of digital transformation. Interpretations will always vary, and that’s what makes this space so rich. But in order to move forward, we must find common ground. This is my viewpoint, as a technologist and a staunch believer in a principle borrowed from architecture: form follows function.

The context for why digital transformation is critically important now is no secret, so I won’t spend too much time on it. Here is what we know: 1) The opportunity to activate real digital transformation in financial organizations (across the industry, not just in sec finance) is now; 2) The pandemic accelerated the adoption of many technologies by about 10 years, presenting us with an unexpected yet golden opportunity to activate digital transformation (76% of institutions cited the pandemic as a catalyst for reviewing and wanting to change their IT infrastructure, according to this survey); and 3) The clock is ticking. This opportunity will not last forever. Each passing year we see the patchwork of outdated technology get more layered, more complex, and more expensive. In 2019, the largest banks globally budgeted to spend $67 billion on IT, with 50 percent or less going toward new technology (which means the rest was spent on maintaining the old). Aging technology can cost each worker 24 hours of wasted time per year, according to a Tech Talk survey.

So, why aren’t we jumping at the chance to change? It’s no secret that digital transformation projects are difficult. They are expensive (hard to get started), take a long time (hard to see through), and may present risks for those who champion them (hard to find advocates and internal sponsors). Despite these challenges, capital markets have done a lot to digitize: From the development of the FIX protocol, to the transformation of social, mobile, analytics, and cloud within the past decade, sustainable technological advancements have altered–and continue to alter–sec finance. But these trends aren’t new. In fact, they have been developing since the birth of the Digital Revolution in the mid-1970’s. Therein lies a key challenge to advancing digital transformation projects: many people treat digital transformation like it’s brand new. New things are scary, and risky, and it’s often easier to plod along with the status quo. Smart technologists will recognize that digital transformation has been around for a long time, and will use time-tested approaches to change management and project management to champion, implement, and measure digital transformation projects. Before fintech, there was financial technology; before the internet fueled our entire world, there were “Internet companies”; before digital transformation, there was, well, simply technological innovation that improved our businesses and made us smarter and faster–we must regain our perspective and get back to that simpler, more approachable view of digital transformation.