The Machine Stops (first appeared on LinkedIn 25th August 2020)

The Machine Stops by E. M. Forster accurately predicts the world we all now live in, sitting safely cocooned from the dangers of the outside world, communicating via video and transacting on-line. In one memorable passage, the protagonist remembers the “olden days” when the whole system was dedicated to “bringing people to things instead of bringing things to people”. What makes the story truly amazing is that it was written nearly a hundred years ago back in 1928.

Time is a funny thing.

A quick look at the papers today (on-line, of course) reinforces this - business models and processes that were destined for the scrap heap (like physically shopping on the high street) are being taken by the hand gently but firmly towards new, self-determined, data driven electronic marketplaces . Capital markets are no exception - we are simply being accelerated to a new, better way of doing our jobs.

This creates tremendous opportunity for those buy and sell-side participants that get this and, of course, for the tech firms that can help them make the jump.

Desktop and server interop (Glue42 and Velox) will become no brainers. Electronic message management and big data analytics (Rapid Addition and big-xyt) will also become a natural part of the technology fabric that underpins successful firms.

There are also stories of a new contender emerging in the Fixed Income workflow space. One that addresses the workflow of tomorrow rather than yesterday.

What brings all these firms together is that they have re-thought the traditional trade-off between build versus buy and replaced it with something far more contemporary - Augment and Evolve. This means that brokers and buy-sides can take a steady, incremental approach in moving from their legacy platforms to the kind of automation and interoperability we take for granted in our everyday lives. Not only that but these firms break the shackles of the past so that new platforms can easily and constantly evolve.

I guess the point is that, ultimately, time and the (technology) tide wait for no man. Clearly there will be some traumatic and painful experiences as every industry adjusts, but the arrow of time only flies in one direction. Those firms that can embrace change and step thoughtfully into the future will prosper.

Footnote: The ideas in the Machine Stops were also the theme behind an album of the same name by English Psychedelic Rockers, Hawkwind. Not their best album ever but still worth a listen…