How The Network Forum reflected Greece’s market transformation

Charles Gubert highlights his main takeaways from The Network Forum Annual General Meeting in Greece, as topics including open source, digital assets, and blockchain dominated the discussions.

When NEMA was held in Athens back in 2015, Greece was in the midst of an unprecedented economic meltdown and struggling to contain widespread civil unrest. Having implemented stringent capital controls and with speculation rapidly mounting that it would leave the Eurozone entirely, most experts believed a Greek economic collapse was all but imminent.

Four years on at The Network Forum (TNF), the country is unrecognisable to what it was like in 2015. Despite going through a period of prolonged hardship, Greece returned to the international debt markets in 2019, while the International Monetary Fund (IMF) is predicting the country’s economy will expand by 2.4% this year. Just as Greece has undergone a big transition, so too has the custody industry to an extent.  Global Custodian takes a look at some of the biggest changes currently facing the securities services world.

Custodians need to rethink on open source

Open source is arguably the lifeblood of some of the leading technology companies today. However, the efforts by custodian banks to digitalise their product suites and services is being impeded by their collective reluctance to embrace open source software, instead relying on closed networks. Even though there are understandable security and compliance concerns about banks adopting open source software too liberally, financial institutions will struggle to attract the best technology talent if they do not change their traditional ways.

Digitalisation of securities

While the industry appears to be ignoring crypto-currencies and initial coin offerings– on the basis that they are too volatile and open to abuse, some providers do see genuine value in the potential of tokenised securities. One speaker highlighted tokenisation, which can be applied to nearly any asset, could help generate liquidity, opening up new sources of returns for investors. Such instruments could also play a critical risk management role, allowing investors to hedge their exposures more easily and cheaply. The role of safeguarding the private keys to these digital securities could be a commercial opportunity for custodians.

Where did all the blockchain companies go?

At prior TNF conferences in Warsaw and Vienna, FinTechs – specifically those focused on Blockchain – appeared to be on the cusp of Uberising post-trade. While a handful of FinTechs are enjoying fruitful partnerships with market incumbents, most failed, as their products did not acquire industry buy-in, and with it funding. At the same time, blockchain is becoming less pivotal to banks’ overall technology strategies, as providers look to concentrate on their application programming interface and big data capabilities instead.