Between hype and swamp
The FinTech buzz is doing the rounds at Zanders too! But... what exactly does the hype mean for us treasurers and risk managers in the real world today? If your viewpoint is, like ours, that financial risks will continue to remain concentrated, very little changes really – apart from the dynamics of risk carriers’ balance sheets, of course, and the amount of related data at our disposal. The future of improving balance sheet management basically ‘just’ requires processing more data, more efficiently (which is about both P and Q). Simultaneously, most businesses are looking for opportunities to outsource non-core activities wherever possible and a plethora of specialist partners have emerged from the woodwork to help them do so. Both combine into a small step towards that other buzzword: ‘cloud’.
For most clients the cloud is largely synonymous with the quest to circumvent their ‘on-premise’ infrastructure: all-too-often their own IT infrastructure has degenerated into a business-built swamp of legacy systems that is slowly disappearing in the mud. No wonder they have a hard time delivering the knowledge, capacity and flexibility that we seek in this digital age. Cloud providers, on the other hand, can – and are usually much cheaper and more cost-transparent about it too. The most commonly cloud hurdles hyped-up by the internet concern responsibility for the data security and potential consequences of storing that data in a different jurisdiction. Rest assured that professional cloud providers take security beyond your own (already highest possible) standards: security is what they do. In addition, most if not all offer choice in where your data is stored geographically. So, the way I see it, neither of these are really hurdles.
Far less frequently mentioned is the challenge of connecting the cloud with your on-premise systems, which, of course, is always necessary in practice. These challenges are usually of painfully functional nature. One adage, that certainly applies here, is that a chain is only as strong as its weakest link. You’d be well advised to optimize the dependencies, complexity and sequence of your data processes before bringing the cloud home. But even then, don’t take the expected economies of scale and flexibility for granted. You won’t be the first to emerge from a long implementation to find that the virtualized risk management system can hardly be scaled up at all. I can reveal that was not the cloud provider’s fault.
As far as I’m concerned, FinTech represents an excellent opportunity for us treasurers and risk managers to improve the infrastructure we work with. It’s all too easy to focus on potential obstacles but building a 'highway' to the cloud is usually worthwhile and not so difficult either. And if you ensure that that new highway doesn’t get pulled into the swamp, you’ll happily hype along..