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UCL Technology Innovation Forum Event

The Future of Financial Markets

Innovate to Regenerate, findings from UCL Future of Financial Markets Forum

PRESS RELEASE: Now is not the time to retrench and ignore new innovations if we are to rescue the world’s financial markets and to see them recover and grow. This was the conclusion of a ground-breaking new forum held at University College London (UCL) on Tuesday 17th February.

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The event proved to be a cutting edge round table debate exploring viable solutions for the current financial crisis.

The need for industry innovation was hotly debated by the 30 experts present. The upshot was a recognition that innovation has for too long concentrated on driving new revenues for financial service companies and that the current need must be for cost reduction and better management tools.

The UCL Future of Financial Markets Forum was attended by industry experts from major financial institutions such as Credit Suisse and Citibank, leading academics from areas as diverse as finance, psychology and computer science and entrepreneurial small companies with innovative products for financial service providers including Message Automation and EuroMTS.

A critical observation was that bonuses have long been linked to driving revenue, not profitability, and this has led to many of the problems facing the industry today. Future innovation trends must incorporate a long term view and companies must be structured to encourage that.

Back and middle office functions, widely recognised as being decades out of date, were the prime target of the assembled parties and whilst renewing these may sometimes be viewed as prohibitively expensive, it was agreed that to progress this must be addressed.

But it is not just about the technologies. The best and brightest management talent and new graduates need to be enticed to the sector in order to achieve real progress. Innovation and the future of finance needs to be as much about the people as the IT.

Consensus among the group was that the industry typology will shift from a small number of giant multinational financial service providers to a more mixed landscape with many more niche companies emerging that are considered much more likely to be willing and able to adopt new technologies than many current players who are still reliant on infrastructure implemented in the 1970s.

The Future of Financial Markets was hosted by UCL Advances, a UCL department specifically created to foster innovations of benefit to society and the economy. It covered themes such as the regulation of financial markets (including legal and economic perspectives), the technologies that enable financial transactions and monitoring of financial markets, and the psychological aspects of financial decision making and training.

Feedback from the Roundtable discussion
"Focusing on whether markets are rational or not has blinded us to what is increasingly clear in many disciplines - emotion as well as cognition are integral to human decision making; particularly emotions like excitement, envy, anxiety, guilt and shame. In fact in "proper" thinking they are in touch with one another. Current events are the result of emotional inflation - a process which seems to be endemic in financial markets and through which innovation gets treated as excitedly phantastic and normal anxiety and prudential thinking get lost. What I learnt at the roundtable was how this process had infected not just the front office part of the market but also the middle and back. There is a huge need to work through and address these problems if financial markets are to be more functional and less risky for us all."
Prof David Tuckett, Visiting Professor, Psychoanalysis Unit, Research Department of Clinical, Educational and Health Psychology, UCL.