I’ve turned to churches throughout my long (I would insert illustrious here but better not) career not for spiritual guidance but for solitude – as the man said “a time for peace”. My favourite for many years whilst I was on the trading floors of The City of London was St Stephen’s of Walbrook where the wonderful Chad Varah was for many years the rector. These days I favour The Crypt. Now, as this is anonymous I’m not going to say which crypt but just “the crypt”, needless to say it amuses me that a place so ancient is one letter short of a concept so modern.
Before I move on I just want to add a few words about the wonderful Chad Varah. Chad was the father of a dear friend of mine, Andrew, and sadly neither of them is with us anymore but both of their legacies live on. Andrew was the most wonderfully inventive carpenter, in truth the word hardly does him justice, and his work can be seen in the pews he created for St Stephen’s Walbrook. Chad resembled a friendly Owl with his round spectacles and pronounced eyebrows. He was multi-talented and was involved in founding the great 1960’s comics The Eagle, Girl, Swift and Robin. Almost unbelievably he was also technical advisor for the comic hero, astronaut Dan Dare. Most importantly in 1953 he started The Samaritans and in doing so must have saved thousands of lives. If you have time it’s well worth reading his full obituary and indeed visiting St Stephens where the original phone that was used in the founding of The Samaritans is displayed with its memorable number – Man 9000 which despite it sounding like a biblical quotation is actually how we used to identify phone numbers in old money; MANsion House 9000.
It’s so easy to sit in your own little box and ignore new ideas and advances in technology. I can assure you that after 40-something years in the financial markets, many of my peers have stuck doggedly at one task. For myself? Well, that would bore me. I’ve tried to stay ahead of the game by keeping track of innovation be it the early days of financial derivatives, through open outcry trading and now in the electronic trading of crypto assets. It begs the question; are traditional financial firms rising to the challenges that fintechs are producing and are they, in turn, really revolutionary?
For many, the arcane world of the wholesale money markets are just that –secret and hidden and, let us be honest to those not directly involved, they are not something that one immediately wants to explore. Well for me they have been a lifetime of fascination and fun and looking back, they were, even in the 1970s a cloud based product. Let me explain why; away from exchange traded products, such as stocks and shares, in the money markets there was no centralised market. The images of hundreds of people standing in circles swapping price information was, until the 1980s, just representative of the commodity markets (Grain, Oil and Soya to name a few) not the foreign exchange markets.
As with any new instrument, there are teething troubles but it does seem the more innovative companies are finding solutions.
The Foreign Exchange markets are made up of thousands of constituent parts, some connected electronically and some still by voice. To paint a picture of this, imagine a world wide web of people exchanging prices and ideas by phone and what do you have? A non-electronic web of buying and selling prices, a sort of cornucopia of prices flying around in the ether. In other words, a cloud created by thousands of participants. Extraordinary isn’t it? For decades before the internet and cloud computing was even contemplated, the financial markets were creating an early version.
Even with the advent of new currencies, so-called cryptocurrencies, the larger trades are still executed OTC (over the counter) with little or no reporting of them. Increasingly transactions have become commoditised on exchanges and enabled efficient price discovery and reporting and this has led to companies, such as Currency Cloud, reinventing the wheel and building a successful model around an existing service and attaching a fintech label to it. Is it really fintech or is it another example of cobbling old services together to produce something seemingly sexy? I must say, and this is by no means a dig at a successful business such as Currency Cloud, that it deeply saddens me when a so-called fintech business is actually just two or three old businesses put together. I mean is a pre-pay card and FX service really a banking service?
However, at present there are some classic cases of how some payments companies are adapting their products to support some of the newer innovative players in the market. Good examples of this can be found with the work that companies such as Afex and World First are doing with their API offerings. Traditional phone broking FX businesses like Afex can be seen as being stuck in the past but they are opening up their resources so that newer financial companies can utilise their technology and benefit from their suite of products, such as faster payment processing, which till now was the preserve of institutional clients. In effect Afex, a company with a heritage of over 40 years, and some of the other larger, well-established FX houses are offering the track for the newer companies to run their rolling stock on. A win win as it saves resources on both sides of the arrangement. This is a fantastic example of how new world meets the old and enhances both sides as we progress to a brave new world!
It’s easy to get over involved with the problems of moving crypto assets to fiat but it is getting easier. As with any new instrument, there are teething troubles but it does seem the more innovative companies are finding solutions. In banking, the rise of “challenger banks” can only be a good thing. In my book, challenge leads to innovation and thus to progress. It is easy to compartmentalise old against new but in reality the old will only ever survive by adapting their existing businesses and designing new ways to access their offerings as will old brokers!