Hi-Tech means High Stakes

Used to be my desk in the dealing room at NCB, Jeddah - KSA. 

I have always thought about blogging, but until this very moment I haven’t had a compelling reason why I should do it. Thanks to my Digital Marketplaces professor, Dr. Ravi Aron, who urged the Global MBA class at JHU to choose an industry and blog on the impact of Information and Communication Technology (ICT) has on the chosen industry. 

I will be blogging on the impact of ICT on the financial service industry. Given my background in the financial markets and trading, and special interest in venture capital, I will be more than happy to share my thoughts and ideas on the subject.

From the book Networks, Crowds, and Markets: Reasoning about a Highly Connected World.

By David Easley and Jon Kleinberg. Cambridge University Press, 2010.

I would like to begin by talking about this awesome thing called banking technology.

Banking technology is a term introduced in the Advances in Banking Technology and Management by the dean of the Indian School of Business, Valamani Ravi. It describes the use of IT and how it helps banks reach better decision and cater optimal services to their customers in a secure and reliable fashion. Many financial institutions have changed their entire strategy in light of this tech surgence; notions such as customer-driven markets and one-stop-shop are among those new strategies that wouldn't have implemented if it wasent for advancement in ICT. If you are interested in reading about the ever-evolving role of technology in shaping our financial dealings on all levels, I recommend this paper by State Street The Evolving Role of Technology in Financial Services

The financial markets have grown tremendously thanks to ICT. Indexes and over the counter trades have helped investors, traders, and businesses beyond anyone’s imagination. Fun fact: a company called Netlist, Inc. has managed to allow 1 million financial transaction per minute via its high tech HyperCloud system. Isn’t that insane! 

The influx and availability of data through the internet and other sources have accelerated demand for high-skilled workers who can combine financial savvy and tech skills. Fields such as financial engineering, cloud computing, financial risk management, trading, and stats, have switched gears to keep up with the financial markets. I am not ignoring the fact that this very reason added an extra layer of ambiguity and complexity, and has caused quite a mess. The S&L crisis of the 80s; the dot-com bubble in 2000; and the subprime mortgage meltdown in 2008, these were some examples that show how ICT can exacerbate a bad situation in the markets.

As in any technological advancement, the goods can only outweigh the bads if put into the right context. Regulators have had tough time keeping up with Wall Street and insurance companies lately, basically because the financial industry has deployed ICT and took it to another level. Make no mistake, this blog isn't a cry out market regulation, or an argument against OTC derivative markets. I am a proponent of such markets, only when there is a warranted need for their existence and used with advanced knowledge.  I am just warming you up for what is coming next (i.e next posts). As I once read in the Economist "new technologies by themselves won't be the answer for business survival".

-FM