Three Predictions for the City of London in 2021

By Bob Santella, Chief Executive Officer, IPC

If CIOs in the City of London were asked at the beginning of 2020 about their biggest concerns for the coming year, they likely would have answered: regulation, followed closely by operational efficiency improvements and the challenges of adopting new technologies. These issues undoubtedly remain important for 2021, but the post-pandemic city now has very different priorities. These three in particular stand out:

Remote working is here to stay

While most firms adapted quickly to the new working environment, ad hoc solutions must be transitioned to permanent arrangements. Given the challenges involved in reorganising office space, plus the sheer logistical constraints associated with scheduling facility access, there will be many employees who will simply have to stay in their current remote working environments for an extended period of time.

In order to foster collaborative working environments that maintain required standards of security over the long term, firms will need to invest in more collaboration tools. Currently, virtual conferencing software allows for limited forms of collaboration, such as screen sharing. The City of London will need more, and better, ways of creating shared online workspaces for employees – for instance, virtual whiteboards. Development and cultivation of client relationships will also require new and innovative ways of hosting fully participatory events online, above and beyond the passive consumption of online webinars and content.

The City will fully embrace the cloud

Speaking of collaborative technologies, cloud adoption and the use of “software as a service” can facilitate better scalability and resilience, not only from a technology perspective, but also in terms of the ability to quickly connect to new markets for price discovery and execution.

The ability to leverage cloud technology, and a cloud-based community of market participants, is a key differentiator for any firm. With cloud deployments of in-house systems, firms can rapidly scale up resources to support high volumes and throughput without impacting their latencies and can then scale down these resources when they are no longer needed. This effectively creates unlimited headroom for any trading system, at a variable cost — a concept previously unimaginable. Cloud-based providers of services such as market data and exchange connectivity have been able to offer their clients rapid access to new markets, with no new technology deployment required beyond configuration. This is essential at a time when technology teams are working remotely and under constrained circumstances, and deployment windows are minimal and high-risk.

Lastly, participants in cloud-based networked communities can easily connect directly to each other. Given the demonstrable benefits experienced during the crisis by those already on the cloud, it’s clear that acceleration of cloud adoption will be high on the technology spending agenda for many firms.

Next-generation technologies

Technologies such as artificial intelligence and machine learning (AI/ML), as well as Distributed Ledger Technology (DLT), will also play a more significant part in our financial market’s infrastructure going forward.

AI and ML platforms are informing better decision-making in often volatile, fast-moving markets by analysing huge amounts of data and information in a matter of seconds. The ability to augment the judgment of human beings, and to better react to volatile market conditions, is critical under current conditions.

For example, market surveillance is a mammoth undertaking for most firms. Data comes from many sources and exists in many formats: trading systems, chat transcripts and voice recordings. This is where the use of AI/ML techniques can have a transformative impact. AI-driven Natural Language Processing enables voice data to be automatically transcribed and digitised, and then processed in a standard format alongside other electronic communications. Firms can also supplement and make more effective use of their supervision and surveillance teams and allocate their time to higher value activities.

Meanwhile, DLT sits at the core of these systems. DLT integration into existing infrastructure is going to be a crucial requirement for firms wishing to benefit from these massive efficiency improvements. It’s not just about integration, though – to fully leverage the wider capabilities offered by DLT, such as real-time settlement, firms need to start thinking now about the wider changes to their infrastructure that will be required to support increased digitisation.

In summary, as we look to 2021 budgets and beyond, technology investment will need to be deployed in the three above areas by firms wishing to maintain a competitive edge. Remote work, cloud computing and next-generation technologies like AI and DLT support the growing demand for automation in the City of London. CIOs will look to these technologies as drivers of operational efficiency, a means of better managing organisational risk, and as solutions for reducing dependency on large office environments.