Capital Markets: Towards a Data-Driven Future
Capital market firms are seeking competitive advantages by exploring the potential of technologies like cloud computing, IoT and big data. In an exclusive interview with CIOReview, Dr. Mayiz Habbal, Founder and CEO, Capital Market Leaders Group, talks about the influence of such trends in the industry and the ways in which companies can leverage these technologies to foster growth.
What do you think are the benefits of cloud computing for the Capital Markets, and how have you embraced it?
Cloud computing is a widely accepted service model at this stage within the capital markets industry. It was just a matter of time. After some resistance, the interests of IT leaders facing tremendous pressure to cut costs and service providers competing to shorten time to market met and the benefits are multi-faceted. My firm, Capital Market Leaders Group, have witnessed this embrace first hand in 2013 and 2014. The adoption of cloud computing has the potential of transforming and/or disrupting the business of many market utility service providers. Think about the business of custody, for example.
Capital Markets are sitting on a goldmine of data. How do you examine the effective use of this data—how to consolidate, integrate and use it to drive business?
The capital markets industry has always been a data intensive business. In fact, one of the main strategic guiding principles we used at UBS was that the business of Capital Markets is an IT business. IT is about information and this is another name for data. Today we have plenty of historical data that can be used to predict markets and support decision making. This can be done at a fraction of what it used to cost. The math is quite strong and well understood but the real problem is that of management. It’s not easy to harness the tremendous power of this data into material benefits for the business. In my opinion, we are struggling to create value from this data and along the way we are challenged with the usual operational barriers of any IT environment: where is the data and how to use it?
What do you think are the key technology areas that Capital Markets should focus on to drive growth and innovation?
The capital markets services industry is nothing other than a series of networked data businesses slowly getting commoditized. The growth of the industry lies in financial technology innovations that will lower the barriers of participation and remove the mystique. In other words, the data is the new firm and technologies which enable firm to monetize the value of the data they have and collect are essential to foster innovation and growth.
What does the Internet of Things mean for Capital Markets?
The “Internet of Things” is another term for “Networked Data Businesses.” Effectively, the capital markets industry has a big appetite for data in order to help capital find the ever elusive alpha it is continuously seeking. Alpha discovery will benefit tremendously from this next generation of internet connectivity, since it promises efficient data collection from economic and political activities necessary to predict alpha generating assets.
Over the years, we have witnessed a massive change pertaining to the role of CIOs. How would you describe your own role that has changed in the past couple of years?
My firm advises both IT and business leaders. The convergence of the two roles is happening in the current scenario. This is not only happening at the individual company level but also at the industry level. Capital market businesses are becoming IT businesses. Growth strategies we develop for our clients simply consist of new markets for existing products or services, or new services and products for existing markets. These new strategies could not be realized in the first place without information technology. The competitive edge is simply based on developing an ability to assimilate complexity and harness its potential.
With your rich experience of managing organization and steering technology for your enterprise, can you please share some of the unique lessons learned and your advice for fellow CIOs
I am afraid it is quite difficult to generalize because every CIO is facing different set of challenges unique to his organization. However, it is safe to say that, in this environment, the early adoption of technology is a must to stay ahead in the game. Adoption does not mean that we have an ongoing exploratory project, but it means that we are willing to roll out new services and products using this technology as quickly as possible because if we do not do it, someone else will. Fintech is a very active area of investment these days and every day you hear of companies with new ideas which if properly executed will no doubt cause tremendous disruption in the financial services industry.
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