Meet the fintech taking on legacy technology in the capital markets • TechCrunch

Moore’s law notes that the number of transistors on a microchip doubles every two years, while its price is halved in the same period. It has given significant growth in processing power in the past few years, allowing many applications to improve performance by upgrading the equipment without structural changes.

In the decades since Intel co-founder Robert E. Moore first made this observation in 1965, consumer technology has continued to grow rapidly, while the technology that underpins capital markets has lagged behind. Although recent physical failures have led to improvements related to Moore’s law, advances in distributed systems have continued the pace of innovation. Most of the country’s capital markets, on the other hand, have not taken advantage of such technological advances and are still operating in the past.

The $924.5 billion U.S. defense industry still relies on high-tech systems from the 1980s. The result is fragmented systems and exchanges that leave market participants scrambling to respond to market changes and meet the demands of hungry investors and regulators.

To understand how we got here today, we need to look under the hood. The main frameworks that have supported the world’s capital markets for decades have been built to answer specific questions at a specific time. Over the years, modern technology has been stacked on top of old infrastructure, only providing temporary solutions. Like building a new house on an old foundation, sooner or later the foundation will give way and the whole structure will collapse.

In short, the silos have scaled the length to the point where it is easier for people to talk to each other instead of finding a way for technology to communicate. This technology debt leads to the breakdown of processes that lead to the inefficiencies that plague companies today.

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Investors, like all consumers, are familiar with on-demand services. They expect to be able to respond quickly to market trends, and are looking to expand into alternative asset classes like crypto. Post-trade services are challenged to keep up with these demands and provide the value, insight, and user experience that investors and regulators demand.

From Financial Institutions to Competitive Profits

For many companies, back office operations are “out of sight and out of mind” – until something goes wrong. When factoring in loan products, interest rates, balance sheet effects, and penalties, the cost of transaction failure is high. It is estimated that a global trade failure of just 2% would result in costs and losses of up to 3 billion dollars.

The solution is to reduce manual intervention in favor of automation and cloud-based solutions. To operate at maximum efficiency, banks and retailers must reduce manual processes that increase the risk of error and work in silos in favor of technology that enables users to make smarter decisions and identify potential risks at in the trading system.

Modernizing the post-trade technology stack is estimated to reduce costs by 20-30% in key areas such as data management, reconciliation, clearing and settlement, central office, process reporting and overall application footprint. Ripples of support are emerging in the industry – for example, in 2021 Nasdaq has partnered with AWS to build the next generation of cloud-enabled solutions for global capital markets.

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Simplifying the technology behind trading and business operations can transform it from a cost center to a profitable business. But for many companies, development requires rewriting many systems with significant technical debt, with large amounts of natural resources and high costs – a daunting task with little chance of success.

Modern, high-performance computers coexist with COBOL, and small services with mainframes. But as the value of information continues to increase, those who have invested in technology and opportunities will continue to move at a faster pace, the changes in the market during the day will come to the fore.

Modern problems require modern solutions

A modern, single source of truth has the potential to improve performance across organizations, asset classes and regions, reducing costs, complexity and risk. In turn, this makes it easier for emerging entrepreneurs, professional entrepreneurs, and institutions to access the country’s capital markets. Founded in 2018, Clear Street is a leading fintech broker and non-bank building state-of-the-art infrastructure to increase market opportunities for all participants.

Clear Street’s mission is to replace the old infrastructure used in the capital markets by starting from scratch to build a completely cloud-based system designed for the modern needs of the complex global market. Its proprietary technology platform adds greater efficiency to the market, while focusing on increasing productivity and reducing risk and cost for customers.

The company’s mission is to provide all market participants, from senior managers to large institutions, with the tools and services they need to compete in today’s fast-paced markets. It has never been clearer that the power of transformation, process change, and speed require tools that allow companies to understand markets in real time. In just a few years, the company is handles about 2.5% of the US balance sheet volume, which amounts to about $10 billion in activity through its platform.

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Clear Street takes the best technology from the world of Silicon Valley and uses it for money. The company’s technology stack uses state-of-the-art cloud infrastructure, including resilient service orchestration, physical infrastructure management, and data scaling – a stark contrast to the batch processing offered by mainframes. Clear Street’s entire software system is built on this standard collection of collaborative technologies, allowing components to seamlessly communicate and work together, eliminating the need for complex mediation processes.

It is time to renew the infrastructure that strengthens the country’s capital markets. In order to keep up the pace of growth, companies will need to invest in technology to meet the needs of investors and regulators. Those who do will be part of building a modern, sustainable future for capital markets – improving access, speed, and service for all participants.

Clear Street is an independent, non-bank brokerage building state-of-the-art infrastructure for the nation’s capital markets. The aim of fintech is to create a single source platform to serve all types of investors, across all asset classes, globally. For more information visit https://clearstreet.io.

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