A conservative culture driven by risk and regulation

The banking industry culture is understandably conservative.The primary requirement for its clients is the safekeeping of their fortune. Furthermore a nation’s banking system is only as safe and sound as the banks within the system. This explains why public authorities closely regulate and monitor banks’ activities.

In 2010 the US gave, once again, more responsibilities to the Federal Reserve through the Dodd-Frank Wall Street Reform and Consumer Protection Act. The FED was granted important authority to monitor large or complex financial organizations that could pose a threat to the stability of the nation’s economy or financial system. This resulted in an unprecedented wave of new regulations and spending to implement them.

Dodd-Frank impacted the US financial institutions as well as any foreign banks dealing in dollars or doing business with American residents. Following the Dodd-Frank implementation, Banks reached levels of compliance-dedicated employees, system complexity and, unsurprisingly, conservativeness never seen before.

A complex ecosystem relying on complex infrastructures

The Finance Industry relies on a complex ecosystem of Financial Services Firms working together (Banks, brokers, dealers, clearers, exchanges, custodians…). Each of them relies on incredibly complex and sophisticated information system infrastructure to process their activities, but also to monitor their risk and compliance. These infrastructures are broken down in applications per activities (retail banking, commercial banking, asset management … etc) and, for each activity, by products and functions (front, back, accounting, risk…). These applications may have been developed in-house or may come from various vendors. The technology they are built on varied, and the extent of their integration and ability to communicate is also highly diverse. The resulting level of complexity is second to none.

To deal with this complexity, Financial Services Firms have large IT organizations. These organizations are broken down in departments and teams specialized by business, functions and technology. In order to improve their agility and alignment with the users they support, these teams must be geographically and organizationally nearby. This results in the formulation of organization cells and silos.

The complexity and interconnectivity of this ecosystem compounded with the complexity of each information system infrastructure on one hand; and, the style of organizations needed to support these systems compounded with a highly conservative culture on the other hand; have implications on a method to introduce change to the Finance Industry. The cost and risk of a project will increase exponentially with the number of organization cells and silos involved in it.

Why revolutions don’t work in Finance ?

Large projects have a poor track record in any industry :  the larger the project the lesser the likelihood of it succeeding. It is commonly agreed that to improve its probability to succeed, a project must have a clear objective, specific deliverables, a well identified leadership, a good governance and a well thought-out plan. This is only achievable for focused projects, addressing well identified business issues.

Projects aimed at fixing several business problems will struggle to have a clear objective, specific deliverables and a well thought-out plan. These projects suffer from the complexity of shooting at multiple moving targets at the same time. But if this was not enough of a handicap, aiming at solving several business problems at once means that the project will span over several organization cells and silos. This inevitably results in too many cooks and therefore the impossibility of setting up a clear project leadership and efficient governance. In these conditions the project is doomed.

All the above is particularly true in the Finance Industry because of its inherent complexity and its conservative culture. A product such as a CP will initiate from one department then will be distributed by another, before going to back offices working with Security Services and custodians, and clearing house, and risk departments and compliance functions… just to name a few. Of course each of these departments have their own management, governance and systems. Add to the mix finance conservative culture where everybody has the power to say no, fears change, and it is easily understandable why transforming the end to end processing of a CP is a fantasy. Revolution simply does not work in finance.

Onbrane – The art of bringing change to the Finance Industry

At Onbrane we understand the Finance Industry, its complexity and its culture. Our platform and our deployment approach has been built with this in mind.

Focused

Onbrane addresses a clearly identified business opportunity; the negotiation, issuance and distribution of debt products.

Incremental transformation

Onbrane adds value by digitalizing and enhancing the current industry processes. Onbrane will keep improving and simplifying these processes by incrementally working with the industry.

API Driven

Onbrane has been built using microservices communicating with each other through native API. This allows our users to decide what functions of Onbrane they wish to use to make their integration easy.

No Big Bang

While Onbrane aims at becoming an industry platform, it will be rolled out one user at a time. We don’t need a big bang conversation of this industry for Onbrane to launch and be operational.

Highly Scalable

Onbrane platform is completely virtualized and cloud-based; This allows us to scale up as far and as fast as we need.

All our technology and organization choices have been made to support the above.