For the last 20 or so years, I’ve lived and breathed Investment Banking. I’m used to an environment where the pace is relentless, there is always a sense of urgency and time is money.

So, transitioning from the fast-paced world of Capital Markets to the Property Industry over the last few months has been an eye-opener and I’ve realised just how different these two worlds truly are.

For example, in Capital Markets, the time between trading and ‘settlement’ (the settlement cycle) is just a few days, and there are moves to further reduce this to one, or even zero days. In the property industry, the pace is much slower. For example, and as many of us know, it can take three to six months to sell a property. And it is not just the pace, it’s also expensive. Often, multiple intermediaries are involved, which can drive up costs significantly. It’s very different from the streamlined processes I’ve been used to in Capital Markets.

However, with some analysis, I’ve found out that the housing market is being disrupted and it’s finally starting to see some real change.

Firstly, there is the emergence of iBuyers, which benefits sellers by creating greater liquidity in the market and reducing the time a house stays on the market iBuyers are also helping to enhance the valuations model, with a much greater vested interest in getting a property’s price right.

Secondly, schemes like MyIdentity are determined to streamline the onboarding process. Identity Verification, Know Your Client and Anti Money Laundering KYC/AML processes which can currently take days could be reduced to hours or minutes. This will remove the need for each service provider such as lenders, estate agents, and conveyancers to carry out separate checks, making the process more efficient. However, this means the traditional service providers lose a revenue stream, so they are not supporters.

Next, the lenders’ risk departments are changing their ‘blanket’ property risk evaluation models of properties. This could lead to personalised and targeted approach to lending which in turn should increase the number of loans approved.

Then, to reduce rising conveyancing fraud and payment diversion fraud, the Australian PropTech company PEXA have entered the UK market with their standardised and robust settlements process.

Lastly, messaging platforms such as Coadjute are disrupting the market and adding transparency to all stakeholders in the transaction.

As the property market continues to experience positive disruption and stakeholders receive timely information, we can anticipate a significant reduction in the time it takes to purchase a property. While I’m not suggesting were on the next day settle cycles like we see in Capital markets anytime soon, it’s worth remembering that not too long ago, that timeframe was 1 month, and securities were delivered physically by clerks in the city.

The continuous progress in technology and innovation certainly generates anticipation for what lies ahead in the real estate industry. This will, however, greatly impact the operating model and revenue streams of the established industry players. So, it will be interesting to see how they react to these new disruptors.

Among banks silos are commonplace. That and the legacy systems that siloed departments use. In large organizations where many departments represent specialisms, silos exist and are often counter-productive. Modern systems may go some way to changing this. But there is still resistance to both change and new technology.

In her book, The Silo Effect, Gillian Tett, who is also an Editor at the Financial Times, shared how “gigantic financial companies were split into so many different departments, or silos, the leaders who were supposed to be running the groups did not understand what their own traders were doing.”

Things may have improved, slightly, since Tett’s book was published. The rise of the cloud providers, the embracing of agile methodology by many technology enthusiasts in banks, and the increased rhetoric emanating from key banking figures like Jamie Dimon suggesting banks will become technology companies. All these things give the wider industry sector some hope. But change is still taking too long.

Overcoming silos through simplifying processes

One of the companies helping banks to overcome their digital challenges is Fimatix. The company is focusing on supporting companies from the financial services industry to navigate the increasingly complex regulatory demands and other challenges which they face. To increase the support available to financial institutions, David Beatts has been appointed as Head of Delivery at Fimatix.

David has years of experience working within investment banks, outsource providers and as a consultant. He’s been at the coal face working both in business, operations and IT functions and has witnessed a wide and diverse set of changes over the years.

“Investment banks, be they big or small, have generally have had to contend with the same types of issues problems,” namely:

1. Cost control has driven down overall headcount, required roles and functions to be offshored and reduced investment in technology
2. Business change has seen Increased trading volumes, more clients, new products and decreasing spreads
3. Regulation consumes technology budgets and requires new processes
4. Risk & Control requires headcount increases to cope with additional processes and their oversight.

The impact of this has generally been that after spending technology budgets on regulation, risk & control and revenue generation, there has been little, or no money left for the rest of the organization.

Additionally, David explained, that the way in which the banks grew has created a silo’d structure. Typically, each financial product that the bank offers e.g., equities, rates, FX, and derivatives all grew in a silo’d manner with their own trading desks, technology and support functions. “The focus was growing the business to generate the revenue, with less regard given to overall architecture or any organization efficiencies” Furthermore, these silos are divided into smaller sub-siloes. For example, equities are typically split by cash equities, equity financing, ETF’s and equity derivatives.

The overall impact of this is “a legacy of technology debt, process complexity, inefficient organization structures and lots of manual work. It’s possible to change aspects of a sub-silo, but only making one part slightly more efficient doesn’t change the dial. As a result, many firms are really struggling to unpick the issues and deliver change.”

In short, “Banks are trying to meet 2020’s client and business expectations with 1990’s organizations, processes, data and technology.”

Working efficiently with a digital transformation partner

We are all seeing examples of banks revolutionizing their technology solutions. In the United Kingdom, companies like Thought Machine and Form3 are just some of the firms’ supporting banks in their need to update core banking and other systems. But are they able to overcome the silo effect with these technology solutions?

David shared how digital transformation shouldn’t focus on the role of the CTO exclusively. Yes, the CTO can embrace cloud solutions and agile methodologies, but does that mean that the business has transformed?

“Transformation shouldn’t focus on just the digital aspects and the CTO’s domain exclusively. Technology is certainly a key enabler but it’s not the only pillar that enables change. The technology solution should be identified after you’ve defined what problems you need to solve and how you want to work in the future – not the other way round.”

Why Fimatix can offer the solution

David’s background is a mix of working in, managing and leading operations functions. Working in business management and consultancy. He’s also worked in multiple projects, programs and change functions, not just technology but also business process re-engineering, offshoring, outsourcing, organizational and many others. He’s also a keen advocate of Lean Six-sigma, and believes in the principle of ‘putting the customer as heart of everything you do’.

“I found the idea of building something with Fimatix really appealing,” David highlighted. He pointed out how he could see how the management team at Fimatix wanted to leverage their experience. How they have created products and worked closely with organizations already but want to provide solutions for a wider client-base including financial institutions.

Creating relationships with the business lines and process owners, not just the technology function is the key to helping organisations change. “Asking the CTO to discuss his technology budget is very important. But going to the person that runs the business and helps obtain and direct the technology budget is just as, if not more important.”

David is looking forward to identifying the types of problems that banks have and being able to help them. Not just by giving them another bit of technology, which they have plenty of already, but by helping them create an efficient operating environment. Helping them through the implementation of intelligent automation tools and scalable systems.

This is just one of the opportunities that David feels he will be able to offer clients of Fimatix. Using innovative technology and core transformation capability wrapped around an agile delivery model.

The race to the bottom

The discussion about silos and organizational challenges that banks face has been with us for some time now. Some firms have made some advances, notably delivering silo workflow technology solutions where the processing logic is embedded within the solution. However, in that time those same banks and financial institutions have shed thousands and thousands of employees. They have offshored or outsourced as much as they possibly can. All these factors have led to a situation where real “subject matter experts” are in short supply, making change even harder.

This all against the backdrop of business growth, regulation and risk & control, David voiced his concern about how there is minimal cost saving opportunities amongst many of the investment banks today. “Ask any senior manager and they will say they are running ‘close to the bone’, however, due to the lack of meaningful performance data, this is more a gut feel and not an empirical measurement.”

“So what happens when you get to the bottom of cost saving?” David asked.

The situation calls for a more radical attitude to change, David believes firms will need to employ “a multi-pronged firm-wide approach that addresses all the aspects of the operating model including optimal processes execution, efficient organization structures, a workforce that drives innovation, smart automation tooling and scalable technology. And, at the heart of this will be the understanding of optimum process.”

Unfortunately, the disruption that digitalization has precipitated is not as far along as one might think. Retail banking may be disrupted more than any other sector of banking today, whilst many other financial services sectors are still largely untouched or unchanged. With veterans like David available to help there is every reason to be hopeful though.

In November, digital transformation companies, fund operators and other key stakeholders convened at the annual Fund Operator Summit to consider the major challenges facing the financial services sector in the coming years.

One of the key themes of the discussions that took place emphasised how climate reporting is now more critical than ever. It comes as the Financial Conduct Authority (FCA) progress consultations on additional greenwashing (including restrictions on how terms such as ‘ESG’, ‘green’ and ‘sustainable’ can be used) and climate disclosure obligations, and as the wider regulatory landscape for UK-based financial organisations becomes increasingly complex.

More recently, this included the FCA announcing the formation of a group to develop a an environmental, social and governance Code of Conduct for ESG data and ratings providers, laying the groundwork for the introduction of regulatory oversight over ESG data.

These changes have the potential to significantly improve transparency throughout the financial services sector. Fund operators working in this space will, however, require support – particularly over the immediate term – to develop the systems able to capture the essential data enabling them to stay compliant with the increasingly high standards for ESG disclosure.

This will be particularly important as the greening of the global financial system gathers momentum through initiatives like the independent, International Sustainability Standards Board (ISSB), established as part of the UK’s COP26 presidency, that is developing a global baseline for private sector climate reporting. The publication of final standards for this are expected early 2023.

Digital transformation companies must therefore look to increasingly adapt their strategic approaches with a view to providing these forms of tailored support to fund operators, and companies beyond the financial services sector, helping them to develop an agile approach to data collection. This is a trend that will undoubtedly accelerate as the move towards more robust ESG regulations and reporting continues to grow.

On 7 and 8th of September, Tilly and I had the pleasure of representing Fimatix at the Blue Lights Event in Northampton. The conference marked a fantastic opportunity to catch up, learn from, and share ideas with tech leaders from across our emergency services.

It was brilliant too, to be able to present on the power of digital transformation done right, and on how the pitfalls of projects gone wrong can be avoided. It’s a topic I believe in strongly, so it was great to receive such a positive reception from within the blue lights sector. 

At Fimatix, we’re proud to have built up a successful track record working with blue light and other public and private sector organisations. We know the necessity of ensuring digital transformation is undertaken with the right process and expertise, and just how crucial it can be in modernising, streamlining, and making massive savings when organisations need them most.

We also know how to avoid the sort of project failure that has already led to billions of pounds and thousands of hours lost across the public sector, as well as causing reputational damage when ‘big-bang, go-live’ approaches fall short of expectations. 

For organisations as crucial as our emergency services, this can’t be allowed to happen. It’s why I so valued the opportunity to put forward the benefits of an approach based on diligent preparation, a focus on discovery and innovation, and an agile approach drawn from a deep evidence base, constantly incorporating improvements over the life cycle of a product. 

We know this works. It brought success in our digitisation scheme with the Met Police, which led to over £300m in annual savings. It also ensured we could make critical interventions with the Police National Computer at the Home Office and UK Policing’s Digital Operating Model. 

It’s a huge privilege for us at Fimatix to be able to operate in the blue lights space, and we look forward to continuing our support of the lifesaving work that our police, ambulance, and fire and rescue teams undertake on a daily basis. 

To find out more about how the benefits of blue lights and public sector digital transformation, email Simon Durtnal, CBO at Fimatix, at simon.durtnal@fimatix.com.