Market finance versus digital!

The digital revolution, which can be defined as all new technologies; Big data, Artificial Intelligence, Machine learning, BlockChain, or the Internet is tending to develop strongly in the financial world (digital finance) and this in all professions.

Whether from a task automation point of view, information processing in the back and middle office professions, or from the front office side with powerful calculation methods to perform predictive analyses, arbitrations, or automate transactions or even from the asset management side with robo-advisory. Everything goes through it.

digital finance

Despite all these innovations and major changes, it now seems difficult to measure the real impact of the digital revolution on market finance, unlike other sectors that have been profoundly changed by this revolution. So how can we understand digital technology in market finance? (difficulty and levers)

Initially, the dematerialization of finance is in fact an old process that is already anchored on the markets, such as the SWIFT system for bank transfers that appeared in the early 2000s. The famous “MTF” trading platforms were also created shortly before the 2008 economic crisis.

All this means that the major players in the financial markets were already used to digital technology and in particular process automation. Unlike many other sectors, digital technology has not disrupted finance. But it can be said that in recent years, innovation in the digital sector has grown significantly and individuals have much higher requirements in terms of speed of transactions in particular.

Moreover, the emergence of Startups specialized in finance, known as “fintechs”, are not only direct competitors of major credit institutions, as one might think, but most of them are in fact there to develop new technological models to improve the existing services of the major banks to which they are attached.

Fintechs are appreciated by large banks because they have more appropriate human resources, they are more efficient, more flexible, and the speed of project execution is higher than large groups.

The blockChain, for its part, is a real technological breakthrough, more and more present over the past 4 years, it constitutes a real breakthrough lever for large financial companies. Indeed, the field of action of this technology could profoundly disrupt market finance by eliminating intermediaries (compensation, transactions, bank syndicates, for example).

The increasingly strict and restrictive regulation of market finance over the past ten years has also helped to reduce the scope for innovative companies and the emergence of new technologies in this sector.

Thus, all these technological upheavals may prove in the coming years to be an important growth driver for market finance, which has seen its revenues decline since the repeated crises. This could simplify finance, reduce costs and thus increase the profitability of the sector, or even generate new jobs.

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Thibault MEYNADIER


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