Sibos highlights part 2: How Securrency and Mizuho deliver their transformation agendas

By Rewan Tremethick, Content Manager.

Welcome back to our highlights of Sibos series. The last article focused on the main reasons capital markets firms have struggled to fully automate.

These, identified by our Meet the Experts panellists, Securrency CEO Nadine Chakar and Mizuho Global Head of Operations Ken Utsonomiya, include outdated attitudes towards data, a loss of the bigger picture of process and data journeys and fear of change.

This article explores how Nadine and Ken go about tackling and overcoming those barriers. They also shared what you can achieve when you do.

How do you get your firm to embrace a data-centric operating model?

Firms need to think about an entirely different way of operating if they want to permanently solve the problem of bad data. This is a big change and it’s not like capital markets firms haven’t had their fair share of transformations. Many executives are fatigued by transformation, especially as past projects have often failed to deliver. Some even end up introducing cost and complexity instead of reducing it.

Nadine says that communication is the key.

“At the end of the day, it’s really getting stakeholders convinced,” she said. “It is being able to give them a sense of credibility. I’ve seen a lot of programmes starting with a lot of hype. You book out the big ballroom, you’ve got the circus going on about how great transformation’s going to be, and it all fizzles out three months later. Make sure you keep your stakeholders along for the ride with you; they have to trust you that that pot of gold is at the end of the rainbow. And when you can do that, people tend to be patient and as long as they can see the value in what you’re doing you tend to move forward.”

Ken, too, places a lot of emphasis on the importance of being able to demonstrate the positive impacts of a transformation project as soon as possible. He calls this communication strategy ‘Show the elephant’ – you can describe an elephant to someone but, if they’ve never seen one, they still can’t understand what it is.

“Even if I explain that new systems or processes bring efficiency gains, people can’t imagine it. So, my strategy is to start small, deliver quickly and show a result. And people will often say ‘We should do more of the this’.”

As we mentioned earlier, there’s a history of failed transformation projects that has made firms nervous of change. Nadine summarised it perfectly:

“We all talk a big game, you know: ‘Oh, we learn from failure and failure is good.’ When was the last time any of us got compensated for screwing up? Probably not ever!”

But firms are currently trapped between a fear of the unknown and the problems of the known. The industry has spent years applying the same types of technology and strategies to existing problems, with little avail. Solving them requires a different way of thinking, but firms first need to make sure everyone is onboard and comfortable with the change.

Nadine said it’s important to help people understand the technology that’s being implemented.

“[At one of my previous jobs] we actually deployed the technology. We got one big conference room and we showed them what [each] system would look like – we deployed 25 different systems, Duco was one of them – and when they were able to see it, play with it and touch it, I think that sense of fear went away.”

Sometimes the perception of risk is related to the old way of doing things. Ken pointed out that Japanese culture has historically been very failure-averse, with employee appraisals working on a negative scoring system. But, he said, tools such as no-code platforms make firms much more agile and mistakes are therefore short-lived.

“Psychological safety, doing more trial and error, that kind of thing is quite important,” he said. “Duco is one of the good examples. Having an easier way for users to do more configuration, more easily. Of course, sometimes mistakes happen, but we can do a lot of changes without asking IT.”

Is automation going to make workers obsolete?

Ken may have talked about a transformation elephant, but let’s turn our attention to the automation elephant in the room. What is automation going to do to jobs?

Our CEO and discussion moderator, Christian Nentwich, told the story of a customer whose head of operations was very supportive of using self-service, no-code technology to empower end users to deliver automation instead of relying on IT. But they couldn’t find a team that wanted to go first. Eventually someone confessed to Christian that they didn’t want to be involved because “the second we touch automation technology we’ll be asked for a headcount saving”.

This is understandably a sensitive subject, but ultimately both Nadine and Ken strongly believe that it’s tasks that will be replaced, not the people doing them. Teams will be able to transition from doing menial, repetitive manual tasks to adding value for the firm.

Nadine gave a perfect example: “When I was running global markets for one of my previous employers, I used to say ‘I need to find traders that can code, and coders that can trade’. We actually paid for the traders to go and learn how to use Python.”

At first the idea of automating some of their tasks caused anxiety for the traders, who feared they would code themselves out of a job. But, Nadine explained, those reservations couldn’t have been further from the truth.

“What they did find out is the mundane jobs where they used to spend a fair amount of time disappeared. They were able to find more time to do more trades, talk to their clients a little bit more, do research. They actually ended up making more money because they were more efficient.”

This shows the value of embracing the opportunities provided by new technology and new ways of working. As Nadine said, “if you’re first, you learn the new technology, then you can actually set the agenda”.

Ken thinks that automation will simply change the priorities for operations workers, rather than replacing them.

“Manual work will be decommissioned eventually,” he said. “Things like regulatory pressure and a desire for better control will see people wanting to do more checks on their data. Operations people will see a shift towards understanding control and the front-to-back nature of the business, globally. But the nature of the job won’t change much, even without the manual work.”

It’s particularly interesting to note the alignment on the impact of automation on jobs given that our panellists come from two very different cultures with very different labour laws. In the US it is easy to lay off workers, but Japanese labour laws make it very difficult. But regardless of how easily firms could hypothetically shrink their workforce, the point is that they shouldn’t want to. Automation is far more than a cost-saving exercise.

Indeed, automation can help the operations workers of today and tomorrow feel more connected to the business and perform higher value tasks. Nadine has already observed the positive impact that newer technologies are having on job satisfaction, employee retention and the firms ability to hire top talent.

“The advent of all these advanced technologies have been amazing recruiting and retention tools for Operations,” she said.

“We are able to attract and retain a higher calibre of people and they stick around because that’s what they want to do. Because what you’re doing now is really appealing to their sense of solving problems. Being in Ops is hip again.”

What does the future of operations look like?

Will large firms still have 15,000 manual processes in 10 years’ time, Christian asks, referencing what one bank told him earlier in the day.

“In ten years there will probably be 20,000!” Nadine said. “But they have to do something about it in order to compete and stay relevant. All these advanced technologies we’ve been talking about [at Sibos] – none of those will work if the data isn’t clean and accessible.”

She pointed to Securrency as an example of what’s possible when you adopt and embrace new technology.

“Look at my company: I’m not saddled with legacy; I don’t have any legacy problems to worry about, so I can be nimble and flexible and fast. I can put a product out in 90 days – it’ll take them [the banks] 90 days just to figure out where the data is.”

She added that the desire to focus on data is there, it’s just always been overshadowed by other concerns. But, she added, on a positive note, technology innovation is going to shift focus onto data.

“I feel for every Chief Data Officer that’s out there – they know exactly what they need to do, it’s just never a priority because something else pops up that needs to happen,” Nadine said. “I think this digital environment that we’ve spent three days talking about will force people to clean up their data, to take data seriously and push it to the next level.

Ken added that increasing regulator pressure will intensify the focus on better data quality, joking that we’re on our way to T+10 minutes.

Summary

Delivering full data automation in capital markets is a significant transformation project. It requires you to manage stakeholder expectation, allay departmental fears about the impact on teams and resources and break free of a decades-old way of thinking about data and technology.

But, as Nadine and Ken are proving, if you seize the opportunities provided by new technology, built on a foundation of clean, accessible data, you lead the industry, remain competitive and stay relevant for your clients.

Watch the full recording of our Sibos 2023 Meet the Experts session below.