Part 1: What the Infrastructure Needs to do
Trades and Products
Where do Trades Come From?
The Purpose of the Infrastructure
Part 2: The Problems with Trade Processing Infrastructure
The Evolution of Technical Complexity
The Regulatory Challenges
The Complexity Cycle
Part 3: Historic Approaches to Transformation
Functionalisation, aka “Factories”
The Golden Middle
Part 4: New Approaches to Infrastructure
Cloud and Utilities
Artificial Intelligence and Robotics
Big Data and Analytics
Blockchain/Distributed Ledger Technology
Distributed Ledger Technology: Hybrid Approach
One of the key problems that make decision-making difficult is the complexity of the organisations. As a senior manager in a bank, it is genuinely difficult to know if you pull a lever or press a button what will happen.
– Kevin Rodgers, former head of Deutsche Bank’s global FX business (interview with Center for Evidence-Based Management, 2017)
Previous chapters have discussed in detail the problems (actual and perceived) in capital markets infrastructure, and explained how these problems are generally symptoms of complexity. This chapter will be most useful for those looking for a model of how complexity interacts with human nature to create worse problems, and distract management from finding real solutions to real problems. It also provides examples (based on real life) of how businesses that were high in risk and low in ethics can grow in a complex capital markets business (and infrastructure) with only limited understanding by senior management. The fundamental value of this chapter is to help the reader understand how simply treating trading infrastructure problems as technical issues is a path to even more waste, risk and greater complexity.