Cybersecurity, Blockchain to dominate in 2016: ISITC

The industry group's annual survey finds disruptive technologies are top concerns while many hope T+2 will not mean massive operational overhauls. Securities firms are gearing up for cybersecurity and Blockchain projects while hoping the T+2 shorter settlement push will not cause them a major overhaul of operations, according to the latest survey from the International Securities Association for Institutional Trade Communication (ISITC), an industry trade group focused on standards. Yet despite juggling new and incumbent technologies 80 percent of firms surveyed say that cost reduction is ?the biggest challenge for them in 2016/17. The survey results do not spell out the top areas ripe for cost-cutting. Overall, three-quarters of respondents, or 74 percent, say that firms have specific plans for investing in cybersecurity improvements this year and next, up from 57 percent in last year's survey, according to the survey. The 14-point jump in concern over cyber-attacks is due to the rise in the number of attacks, says Jeffrey Zoller, chairman of ISITC and vice president at global funds manager T. Rowe Price, in response to questions from FTF News. With respect to cybersecurity, firms continue to enhance capabilities as potential threats increase and become more sophisticated, Zoller says. On the disruptive technology front, more than half or 55 percent of firms are monitoring, researching or already developing solutions for blockchain technology, according to the survey. The focus on new and emerging technologies are part of an effort for combating long-term risk and cost, Zoller says. As for the push in the U.S. for a two-day settlement cycle (T+2), a whopping 82 percent of respondents anticipate no operational issues related to the move to a T+2 settlement cycle in 2017, according to ISITC. When asked if this means the T+2 push has lost steam, Zoller cites other reasons for the response. Firms anticipate few operational or systemic issues related to the move to T+2 since much of the technology needed to facilitate a shorter settlement cycle is already in place, Zoller tells FTF News. Firms still must focus on ancillary issues such as the impact to cash management processes or securities lending recalls.? The Blockchain phenomenon, which may one yield real-time settlement, is not shoving T+2 aside, Zoller adds. The potential offered by blockchain technologies is still in early stages. There is no real correlation between this and a migration to T+2. Some of the other findings from the survey are:

  • 62 percent of firms see investment in technology as a top area of focus for 2016/17;
  • 63 percent of firms ?measure operations success on the ability to reduce risk and cost;
  • And 62 percent of firms say that investment in infrastructure is an area of operational focus in 2016.

For the 2016 annual member survey, ISITC polled 45 members, including representatives from investment management firms, broker/dealers, custodians and solution providers, officials say. The survey precedes the upcoming ISITC 22nd Annual Industry Forum and Vendor Show, which features the theme of, New Kids on the Block: Linking the Past to the Future of Financial Services, according to ISITC officials. The event will be held March 20-23 at the Renaissance Boston Waterfront Hotel and marks ISITC's 25th anniversary. ISITC?s standards efforts focus on transaction processing and related communications. Article: By Eugene Grygo, FTF News