Louis Pastina, who leads technology at consultancy Global Markets Advisory Group and previously served in technology and regulatory leadership roles at the New York Stock Exchange and the National Stock Exchange (GMAG), discusses dramatic changes in financial technology.
Global Finance: Tell us a little about what GMAG does.
Lou Pastina: We provide advisory services to clients who are having problems with their technology, compliance or strategy or all three. For example, we are working with the Nigerian stock exchange—with its CEO, Oscar Onyema, who was at the American Stock Exchange. We are helping him to rebuild infrastructure and the listing program. They have had a tough go of it with the currency and oil markets, but he is doing a great job.
GF: What’s the most transformational technology of today?
Pastina: The Cloud is certainly one of the revolutionary technologies, not just for financial companies but also for industrial companies to reevaluate whether they need a data center. Data centers are expensive. You have to build them or rent them and make sure they are maintained. In a Cloud situation, all of that goes away and you have capacity on demand. That is hugely transformational. It can really affect the bottom line for all companies. It can transform a fixed cost into a variable cost. Large companies are all moving forward with strengthening their security and making the Cloud real.
GF: Cloud opens up other challenges too, doesn’t it?
Pastina: Yes, and the largest among them is cybersecurity. This is the big one, especially when it comes to personal information. All of that needs to be rock solid. Regulators are moving slowly. We are working with a Cloud provider who has asked us to provide a white paper to discuss why they should consider applying Cloud technology in some of their countries.
GF: Let’s talk about cybersecurity for a moment.
Pastina: Cybersecurity is interesting. I am not sure anyone really has the answer yet. This is still an area that is the Wild West. People are constantly trying to break in. If you are good at cybersecurity, you hire those people to break in so they can tell you what to do to raise your defenses. You can try to make sure you let in only the right people, but even those people can make honest mistakes. It’s not always a “bad guy,” and it can be hard to protect against that. CFOs should realize that infrastructures are about to go through a revolution again, and it would behoove them to get ahead of the curve, because these technologies can lower costs, improve resiliency and speed time to market.
GF: What are your thoughts on blockchain?
Pastina: In theory, it takes out the middleman because you can share distributed ledgers back and forth. However, all have different ledgers. I don’t think the answer is clear yet. Some banks are experimenting with it in fixed income. We in the US are in a T+3 [trade settlement in three days] world today. We are an anomaly; Europe is T+1 and futures trades are the same day or T+1. The US is moving toward T+2 and there is no reason that we can’t be in a T+1 system if you know your buyer and seller. I think there will be many other applications for blockchain that we haven’t considered yet. Blockchain is not as mature as the Cloud is, but I think it will be the next thing to come along.
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