For the past several years, derivatives conferences have been all about regulation. But as Dodd-Frank, MiFID II and other global regulations move through the rulemaking phase to implementation and beyond, the focus has shifted from regulation to innovation.
The 2015 FIA Europe International Derivatives Expo was all about fintech, and the top-to-bottom technology overhaul of the world’s financial markets. Mireille Dyrberg, chief operating officer of post-trade services giant TriOptima, spoke with John Lothian News’ Doug Ashburn at IDX 2015 about the innovation cycle, which technologies to keep an eye on, and the role of fintech incubators such as ICAP’s Euclid Opportunities program.
“Innovation is essentially about rethinking old problems and coming up with whole new ways of addressing them,” says Dyrberg, who spoke at the conference’s panel on innovation. She says that instead of operational fixes to mend broken processes, sometimes the best thing to do is rethink and rework the entire process. She uses the firm’s TriResolve service, which changed the approach to portfolio reconciliation from a reactionary process with spreadsheets, emails and calling around, to a proactive process. “I think that is the type of innovation the market is looking to now.”
She says fintech innovation can also be the application of technology from a different industry, such as TriCalculate, which applies state-of-the-art gaming technology to credit risk analysis.
Dyrberg says that, while technology hubs, from Silicon Valley to Stockholm, are important, she sees the best chance for fintech innovation is from early-stage investment by the big industry players. For example, TriOptima’s parent company, ICAP, is now investing in small, innovative fintech firms through its Euclid Opportunities vehicle. The aim is to give start-up firms capital and direction, then step back and let them be free to innovate.
So what innovations is she watching these days?
“I’m very excited about blockchain,” she says. “I think we should ignore bitcoin and focus on the blockchain and the protocols surrounding it – anything with the ledger – you can have smart script and smart code as part of the protocol, where the contract terms are enshrined in the blockchain.” She sees that as the big innovation to watch out for.
Dyrberg also sees things happening right now in bank reconciliations and margin calculations, as new regulations are implemented.
She closes with a reminder that innovation starts with careful contemplation of the exact problem you are trying to solve.
“Do your homework, focus on your areas of strength, and then develop to that market.”