The demands in the market have changed, but the infrastructure that connects market participants has not, according to John Paul DeVito, Co- Founder and Director of Sales Marketing, InteliClear.
He compared the market infrastructure to the pipes, which are dominated by outsourced infrastructure deployed a generation (or more) ago.
“The pipes are clinging and clanging, and the tenants are worried about their foundation,” he told Traders Magazine.
“The lyrics of Bob Dylan are astute: “For the times they are a-changin,” he added, mentioning shortened settlement cycle, zero commissions, robo wealth management, DeFi vs. traditional custodians, algorithmic nanosecond trading, investing in non-regulated alternatives like crypto and digital securities alongside traditional assets in whole or fractional shares.
According to DeVito, fintech firms and established firms alike are becoming more and more aware of the limitations legacy post-trade processing systems can present.
These firms wish to control their own destiny and being beholden to legacy technology and their business models is unacceptable to many today and are looking for options to improve upon the status quo, he argued.
DeVito said that some players will accept those constraints, while others will seek an alternative that enables them to have an operating and financial advantage in the marketplace.
He explained that sometimes it is complacency, but other times it can be the fear of the conversion itself: “It can be a daunting thought to consider the amount of work involved in changing what you’ve known for X number of years and get it working on a new platform that you are not familiar with.”
And tied in with all of that can be a bit of self-preservation or selfishness, DeVito added: “What if the new system is more efficient and my job becomes redundant?’ or ‘Do I want to have to deal with all these technical issues that my service bureau presently handles?”
When asked about his expectations for the operating landscape, DeVito said: “The ‘old guard’ have retired or are on the verge of retirement.”
There are new players with new ideas who will not or cannot accept what they see as antiquated tech and operating models, he said, adding that “complacency and fear do not fit the ethos of ‘real’ fintech companies.”
