• Thomas Zeeb, Chief Executive Officer at SIX Securities Services


• 14.10.2015 01:00 am
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This morning I attended a panel debate discussing how market infrastructures should approach innovation now that the industry is re-shaping itself post crisis. As it stands, there are still several precedents in place that serve as barriers to innovation within market infrastructures – but now, these barriers are slowly coming down and the question being asked is whether market infrastructures can, given the opportunity, be truly innovative.

First, we need to redefine what we mean by innovation. Innovation isn’t just a technology term, but can and should apply to any solution that solves a business problem or is designed to meet changing customer expectations. An audience survey at the outset of the session was a useful litmus test as to how the view of innovation is changing within the industry – almost half of the delegates agreed that innovation meant the ability to successfully seek out new opportunities, rather than tying it to a specific disruptive technology.

This principle is key - innovation doesn't need to be disruptive to be verifiable and, in many ways, it is merely an extension of the work that research and development teams within market infrastructures are already doing very well. If you consider innovation as the ability for constant improvement and adaptability to new market situations, then the securities market already excels. In the aftermath of the financial crisis market infrastructures remained stable, proving a track record of quickly being able to adapt to new and challenging environments.

Indeed, many of the players in the securities market are the same as ten or fifteen years ago, and while many are coming under significant pressure, I don’t believe that we will witness the same displacement of incumbent players by new arrivals as we do in areas like the retail market, and this is positive. Market infrastructures underpin the financial services industry and to function effectively it is critical that we remain stable, reliable and consistent. CSDs in particular have a highly integral role to play in stabilising the industry and absorbing risk. During his talk, Michael Bodson, Chairman and CEO of the DTCC noted that innovation can in fact only happen to the market as a whole if the market infrastructures are involved.

Moving forward, we will need greater collaboration amongst market participants, and will need to create the right environment for innovation to occur within companies themselves. The rise of innovation labs to foster this culture amongst employees is key in encouraging new ideas that could be game-changers – and at SIX we have already created our Innovation Incubation drive which seeks collaborative solutions via workshops with clients and employees across the business to share ideas, and how these might be applied practically.

Whilst innovation can’t be forced, it is clear that the industry mind-set is changing, and we are well-equipped to continue the process of redefining our industry.

Originally published on Post Trade Views here.