The Future of Post Trade Will Be Driven By Collaboration, Not Isolation

Jamie Dimon, Chairman and Chief Executive of JP Morgan Chase, wrote in his most recent letter to shareholders that technology always drives change and that the waves of technological innovation are now crashing in more frequently. He said: “In today’s world, I cannot overemphasize the importance of implementing new technology.”

The importance of technology was highlighted during the pandemic as people around the globe were forced to work from home. Many financial services invested in electronifying the front office, but soon realised the importance of the need to make the same ‘Quantum Shift’ in post-trade. Further regulatory pressures such as the focus of reducing settlement failures, compressing settlement times, as well as the need to be prepared for the growing adoption of digital assets and changes in market structures have emphasised the need to move away from legacy systems in post-trade to a more efficient, flexible, and agile architecture.

Manual processes can comprise the majority of post-trade costs and some firms in financial services are realising that internal changes may only result in limited marginal improvements. Instead, they must collaborate with their external counterparts to truly transform their business models and are turning to fintechs for help in achieving that objective. Fintechs can act as ‘middleware’, enabling collaboration between firms from all sides of the industry and acting as a hub for communication and standardisation across an ecosystem for the benefit of all the participants.

In Ascendant Strategy’s next insight paper, we talk to AccessFintech, Deutsche Bank, Euroclear and Taskize about the importance of collaboration to post-trade transformation, the role that fintechs can play in providing that mechanism, and how to capitalise on these opportunities to deliver meaningful change and make the ‘Quantum Shift’ required to succeed. As Dimon wrote: “If banks want to compete in this new and increasingly competitive world, they need to acknowledge the truth of this new landscape and respond appropriately — sometimes it truly is change or die.”