A Brief, 40-Year History (and a Way Forward) for Financial Services Infrastructure Support Teams

I recently passed a significant milestone in my career: Forty years, all of it spent in the “back office,” supporting the financial industry. That period has seen a transformation of such speed and intensity that it can be daunting to rationalize. While my background and experience might give the impression of a dinosaur who begins every conversation with “in the old days,” I have in fact been spending vast amounts of time managing a number of operational areas across the globe.

As such, I offer a keen perspective on how the support infrastructure has evolved into the current operating model, as well as what requirements for moving into the next decade. Looking at the big picture, one thing is certain: The industry faces enormous challenges as it continues to address the costs, controls, regulatory requirements and client service levels of the post-trade environment. While it’s widely understood that there must a paradigm shift in the way business is processed, it’s uncertain whether those changes will occur through a collaborated market effort or individually, firm by firm. This paper is intended as a high-level roadmap for how institutions, working together, can accomplish that transformation moving forward.

– John Rodefeld, Co-Founder of Kingfield Corporation

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Past, Present and Future


It is no surprise that the financial services support infrastructure has evolved significantly over the last four decades. The historical operational model was based on manual processes, paper records, low volume and simplified products and transaction types supported by modest technology. Because trade settlements frequently required delivering securities in physical form, businesses were concentrated around one another out of necessity. One advantage of this close physical proximity was that it supported a culture of significant socializing and collaboration, in turn leading to broad-based solutions that benefitted the industry as a whole.

Each firm had its own proprietary support system to handle post-trade functions, with most operational problems resolved by phone, post or, in the case of international activity, Telex. Less complex products were processed by less educated workers, often with just a high school diploma. Most staff were based in high-cost hubs like London, Tokyo and New York City.


Fast forward to today, where the industry has witnessed an extraordinary transformation. Support infrastructure can now process operational activity on an incredible scale in any time zone, combining near/far-shore staff and/or contracted outsource firms. Service providers require a highly educated staff to support clients and counterparties alike. These technological and logistical advancements mean that confirmations, settlements, reconciliations, reporting and other important post-trade transaction activities can be processed in any part of the world, at any time, with captive or third-party resources. Because these changes have also slashed costs, firms can now increase volume capacity in a controlled environment and maintain focus on satisfying today’s stringent and complicated regulatory mandates.

Despite this clear paradigm shift in the back-office operating model, little has been done to holistically address day-to-day interaction relating to operational activity between firms. Each day brokers, custodians, customers and market utilities rely on SWIFTs, emails, chat rooms, faxes, phone calls, client portals, vendor links and other bespoke mediums to sort out tasks between organizations.

Each firm also has a web of proprietary support platforms overlaying these multiple communication channels. These platforms deliver or receive the information needed to resolve whatever task is at hand. Give the enormous inefficiency of this environment, companies need to reconsider how they can and should collectively build a comprehensive, strategic and effective infrastructure for cross-operational firm-to-firm activity.

Given that advancements in the current decentralized support model have allowed functions and services to be performed in different time zones across the globe, it’s a considerable challenge for the industry to collectively organize and drive major program changes. And ironically, technology has in some respects made it even more difficult to drive that progress.


DLT, blockchain, AI, digitalization, robots, and other breakthrough technologies will be key to creating a dynamic workplace of the future and solving many of the challenges in this space. To date, however, none has materially moved the dial in reducing cost, control and service levels. In addition, it will take several years to get these technologies fully embedded into the support infrastructure workflows at scale.

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