Financial markets have taken a beating by legislators, regulators and in the press over the past several years. But Steve Grob of director of group strategy for Fidessa Group, says that much of the criticism is unfounded. Jim Kharouf, editor-in-chief of John Lothian News, spoke with him about his defense of the financial industry.
“The idea that there is a real economy on one side and a financial economy that is separate, isn’t really valid,” Grob argues. “The idea that the financial economy has been sent to the back of the classroom because its been beating up on the real economy is equally untrue.”
Grob, who spoke at the MarketsWiki Education World of Opportunity speaker event in London last month on the topic of “The Case for the Defense,” explained that global financial markets are inextricably woven into the real economy, which we all live in. He argues that governments and companies need the financial markets to help facilitate and shift the risk of new government infrastructure projects and companies to expand their business. Despite the financial crisis, financial markets do work and are needed going forwarded.
“You can see how, pre-Lehman, everyone was benefiting from cheaper holidays, buy-to-let and so on,” he said. “It’s easy just to point to finance and say they are the bad guys.”
Grob said the industry is likely “at its lowest level” in terms of popularity and needs to put out a full court press at educating governments and individuals as well about the role finance plays in an economy. Without a concerted effort, Grob says there will continue to be prescriptive regulation on financial markets that drive up the costs, not just for banks, but for everyone. That regulatory push has changed the structure and needs of the market participants, he said.
Part of the solution may come from technology providers such as Fidessa, which has been building software that allows global firms to trade markets around the globe, yet simplifies the workflow. In other words, he said firms are now seeking technology that streamlines and simplifies how trading, middle office and back office processes are done. That may lead to a cleaner audit trail for regulators, but also provide firms with a much more efficient way of handling its business.
Going forward, Grob said there is a great opportunity for the next generation of professionals in the financial markets, to help restore trust and utilize new technologies and platforms.
“Look at the growth of structured and unstructured information, and yet, we’re still looking at something that hasn’t changed since 1970 which is called a spreadsheet,” he said. “And that simply has to change.”