Blockchain has the promise to change Wall Street, and the economy as a whole, but advancements in robotic process automation (RPA) will deliver a greater and quicker impact on financial institutions.
Panelists who spoke at the Operations Conference & Exhibition, which was hosted by the Securities Industry and Financial Markets Association earlier this month, estimated that approximately 75% of financial institutions have examined blockchain and have found few business cases for the technology, noted the authors of the latest SIFMA Insights.
Firms need to learn about the technology and make sure that they deploy it correctly, according to authors Katie Kolchin, a senior industry analyst at SIFMA, and Tom Price, global head technology and operations at SIFMA.
"Slow and steady is warranted, as the primary mission is to keep customer data safe and efficiently complete client transactions," they wrote. "Another challenge is critical mass adoption – for example, the move to T+2 settlement in the U.S. took five years – the industry needs to collaborate to implement on a wide scale."
New technologies have their siren songs, but firms need to identify business cases before investing in and implementing new technologies.
When trying to improve a firm's performance, applying fintech is only 20% of the consideration while 80% is identifying the inefficiencies in the processes, noted Mike Bodson, president and CEO of the Depository Trust & Clearing Corp., at the conference.
"Firm's do not buy technology," wrote the authors. "They buy a solution to a problem and not apply a solution to a problem that does not exist."
Eliminating repetitive manual tasks via RPA will enable employees to focus on higher intellectual tasks, they added.
Kolchin and Price also noted that the industry has a lot of low-hanging fruit that RPA can address.
"We still have a large number of human processors working in Excel sheets to gather information from one system and transfer it to another,” they wrote.
However, most of those who support the back office, expect it will be a while before operations reach the next step in its evolution.
Of the conference attendees polled, a clear majority, 65%, expect it will take the industry three to five years before the industry achieves it. An equal amount, 17%, thought the process would take between one to two years or more than seven years. A cynical 1% of the respondents believed that it would never happen.
