Mitigating Risk, Engaging Industry, Advancing Innovation, Improving Efficiency

The Top 3 Issues Driving DTCC’s Fintech Strategy in 2019

By Jennifer Peve, Managing Director, Business Development & Co-Head, Office of Fintech Strategy | Sep 18, 2018

Jennifer Peve, Managing Director, Business Development & Co-Head, Office of Fintech Strategy
Jennifer Peve, Managing Director, Business Development & Co-Head, Office of Fintech Strategy

At DTCC, our Fintech Strategy team defines the firm’s strategy for new and emerging technology innovation, leads efforts related to the research and experimentation of fintech, works with colleagues and the industry to advance dialogue on key topics and develops thought leadership.

We develop an industry-wide view of what’s coming by partnering with technology vendors, representing DTCC on fintech committees and speaking at fintech conferences. This insight and perspective serves our business units and our clients. It allows us to determine what’s desirable or needed from a client perspective, what’s viable from a business perspective, and what’s possible from a technology perspective.

Through our exploration into artificial intelligence (AI), blockchain, crypto assets, robotics and beyond, we’re developing a path towards delivering client value by further enhancing efficiencies while reducing risk and costs.

As we look to 2019, here are three key trends driving our fintech strategy.

Client Digital Transformation

We are an extension of our clients’ infrastructures, so understanding their needs and challenges is critical. Our clients don’t ask us for specific new technologies. They ask us to solve problems for them, to improve their business outcomes and bring value.

Our approach to understanding how our client’s strategies and priorities will impact the long-term outlook is multi-pronged and involves collaboration across the organization. First, we build an understanding of the landscape, where the industry is focused and how it is innovating. Next, we evaluate the adoption maturity of various emerging technologies. Finally, we consider how certain emerging technologies may enable the products and services our clients need, and what this means for DTCC. This year, we looked at the future of the U.S. cash equities landscape. We asked the team to be bold, think provocatively and ideate without constraints.

We projected forward: How will the evolution of emerging technologies enable new and different experiences, and what is DTCC’s opportunity in the new and evolving ecosystem? Once we developed guiding principles, we war gamed a set of scenarios, and prioritized a short list. The list enabled us to identify foundational steps to prepare for various outcomes of an evolving ecosystem. The result was a near term plan that is nimble enough such that we can pivot our strategy as new things emerge.

These types of engagements allow DTCC to think differently and allow us to better align our fintech strategy with core business goals.

Competitive Landscape

Understanding and knowing the landscape intimately allows us to generate insights on and monitor new, in-development and emergent technologies as well as the fintech firm landscape. Whether an incumbent or a startup is employing technology innovations to build products and services, we aggregate data on these companies. We use a few tools to support us through this process, including a plethora of research — originated within DTCC, as well as via trusted third parties in the industry. Essentially, it requires getting out there in the field and acquiring first-hand knowledge.

This knowledgebase enables us to consider where to compete and when to partner. As customers demand innovation, partnering with a fintech startup can be a win-win strategy. It creates opportunities for an incumbent to benefit in delivering more timely and innovative products and services to clients, while fintech startups benefit from the scale and community the incumbent brings.

I travel throughout the U.S. and Europe, sitting down with industry leaders, regulators, policymakers, participating in committees and on various blockchain roundtables. Our footprint includes participation in the World Economic Forum, Hyperledger, the Digital Chamber of Commerce, Global Digital Finance, SIFMA Blockchain Roundtable, Blockchain Research Institute, and other collaborations which converge together on upcoming technologies. Having a seat at the table is crucial for us to understand current and emerging trends on the fintech landscape and their potential impact on DTCC and the industry.

Internally, we work closely with the business heads across DTCC in both one on one discussions as well as via a monthly Innovation Forum. The Innovation Forum is where we provide updates on how we are executing upon our fintech strategy, present new opportunities for consideration, and enable rapid decision making across business, function and geography. Recently we covered a hot topic across the fintech industry: crypto-assets. Sharing new ideas and developments on emerging technologies with DTCC’s leadership positions us to stay ahead of the curve.

Regulatory Landscape

We operate in a highly regulated environment. This means that while it is an imperative to keep up with technology innovation, we must also understand how supervision, oversight, compliance, rules and laws interact during this time of such rapid technological change.

DTCC has a 40-year history of leveraging technology to drive innovation and reduce risks and costs for our clients. We continue to build on that legacy by advancing the use of technology innovations to enhance post-trade processing while ensuring our applications are consistent with key policy objectives of risk mitigation, market safety, certainty, reliability and efficiency.

In the spirit of collaboration, we also share the lessons we learn in operationalizing these technologies. To this end, I sit on the U.S. Commodity Futures Trading Commission (CFTC) Technology Advisory Committee and have recently made presentations on blockchain, outlining the key risks on operationalizing it with distributed ledger. I’ll be at the committee’s next meeting on October 5, then heading to Las Vegas for the Money20/20 conference to speak on how blockchain will revolutionize the financial industry.

Each of these trends plays an important role in defining DTCC’s fintech strategy and provides a solid framework upon which future initiatives can emerge to help bring value and benefit to the industry and our clients.


 

 

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