Connectivity innovation: The Quantum Leap of the Post Trade world?

I was reading last week about the growing phenomenon known as the Tesla Grin – the smile Tesla e-car drivers are said to have on driving the vehicle, thanks to the happy and giddy feeling they experience as a result of the driving experience. I'm personally a bit of a petrolhead and, though I haven’t driven the Tesla, imagine indeed it must put a smile on your face to drive with far less guilt about your carbon footprint at those speeds, and a novelty to steer and guide the car with clicks of buttons, installing software updates like our mobile phones and laptops.

I also learned that, compared to our conventional cars, which typically would be made up of over 1,000 pieces, the e-car requires far fewer bits - more like 100 mechanisms - to work, reflecting its transition from a mechanical makeup to electronic. This said, I’m not planning on giving up a real exhaust in favour of a "swoosh" just yet!

Some say that the e-car is the way of the future. Once the prices come down to make them more accessible and the infrastructure goes up to support them more widely, perhaps the e-car will represent the quantum leap of the car industry. We've already seen what's happened with the market capitalisation of Tesla in the past month – the investors certainly seem to think this is the future.

This got me thinking about the business I work in and what may be the quantum leap in the post trade world? My answer – surprisingly for it is part of the industry's foundation and yet often overlooked – is connectivity.

Connectivity in our world is pretty much everything. It is our glue. Market infrastructures like central securities depositories (CSDs) provide "the plumbing" for financial transactions between trading parties. The way our customers interconnect with us, and the way we facilitate these transactions, is essentially via our connectivity platforms.

Unsurprisingly, connectivity platforms in the banking industry are undergoing major modification in line with the current digital transformation we are experiencing – our own new connectivity suite ClearstreamXact is but one example. We are spending a lot more time on designing the user interface, creating intuitive structures and enabling customization as that’s what we are accustomed to in our consumer-product lives.

Why do I see this modernisation as a quantum leap? If I think back to when I began in this business – and it wasn't that long ago! - I recall fax (even telex!) printouts of trade positions, corporate actions and the like, and colleagues and customers combing through these with their highlighter pens. I remember the first online system I deployed to clients in 1995 – using 56k dial-up to download a full report set took hours. There was no cloud or remote processing option back then. Now, securities information is easier to access at a touch of a button; almost all is done electronically, be it at your desk or on the move. Today, we take for granted just how much this connectivity experience has changed, and the efficiency and risk improvements it has brought.

For tomorrow, I wonder to what extent – and at what pace - application programming interface (API) systems will be the new norm. APIs are essentially a set of routines, protocols, and tools for building software applications that connect systems together. We were happy to note Germany's figo business ("Banking as a Service" platform) being awarded "FinTech of the Year 2016" by Paymentandbanking in the "Later Stage" category – and my colleague Ankur has written about the importance of this company before. Might this FinTech API example be a precursor to another quantum leap in banking connectivity? It looks like this could be the secret sauce that connects old tech and new tech and bridges the perennial adoption challenge. This is an exciting development.