Watch this series examining top tips from leading innovators in the financial industry on how to make innovation a success. This week: Interview with Robert Palatnick, DTCC.
The complexity and legacy of technology built by and for financial institutions over the last several decades were responses to a series of innovations, various crises and regulatory responses to those crises. Indeed financial institutions today face heightened regulatory scrutiny and increased risk management expectations, both of which squeeze margins at these firms.
“The financial industry has created the ecosystem of components and interactions that exists today,” says Rob Palatnick, Managing Director and Chief Technology Architect at the Depository Trust & Clearing Corporation (DTCC). “Aspects of that ecosystem are very tightly connected and were made efficient because the industry is responsive to the clients and is trying to reduce the friction and optimise that infrastructure as much as possible. So changing that is going to be extremely difficult.”
We found that all of our best opportunities for looking at our business in a completely different way have come from client interactions.
Despite current frictions in financial markets, Palatnick believes that firms must adapt and pursue innovation to survive. “The motivation is that whether it’s Silicon Valley or Silicon Alley, or the equivalents around the globe, they are all coming for us,” Palatnick emphasises. “That innovation, drive and competition - if that’s not an inspiration for the industry to reinvent itself, then I’m not sure what else will be.”
The DTCC approaches innovation via its technology sandbox with a lab and cloud capability. The sandbox allows DTCC’s innovation teams to explore ideas and experiment without being bound by lengthy procurement processes. “The ability to just create an environment, try something out, fail fast or succeed and go on to the next step has been tremendously enabling,” Palatnick says.
Survival of the fittest is usually the rule that really applies. The best solutions, the ones that are done with the best return and business value, are the ones that succeed.
Beyond the sandbox, the DTCC’s framework for innovation involves clients, resources, governance, and information technology. The DTCC’s “IT for IT” programme entails an annual review of DTCC’s entire technology portfolio. Palatnick elaborates, “We examine whether we need to change our model to enable better technology solutions for business problems or potentially to drive down costs. Taking advantage of automation, cloud or other capabilities can help to move the needle significantly for the business.”
Read related interviews:
- Sebastien Nunes, Head of Innovation and FinTech, BNP Paribas Securities Services
- Scarlett Sieber, Senior Vice President and Head of New Digital Businesses, BBVA
- Nigel Dobson, General Manager of Transformation Projects, ANZ
- Claire Calmejane, Director of Innovation & Digital Centre of Excellence, Lloyds Banking Group
- Saket Sharma, Head of Treasury Services Technology, BNY Mellon
- Eiichi Kashiwagi, General Manager of the Digital Innovation Division, Bank of Tokyo-Mitsubishi UFJ
- Genevieve Douhet, Associate Director, Group Innovation Department, Societe Generale
- Christophe Chazot, Head of Innovation, HSBC
- Tim Bosco, Senior Vice President at BBH
- Angus Scott, Director, Product Strategy and Innovation, Euroclear