Interview: Cyril Cottu, BNP Paribas Global Markets – the Tesla effect

Cyril Cottu, BNP Paribas: data, computer power and connectivity – “mega-trends” driving rapid change

FinTech Futures met with BNP Paribas Global Markets’ Cyril Cottu to discuss AI, bots, the demise of email, its investment in Symphony and a host of other tech topics. All fit within three “mega-trends” that are driving the strategy, investments and skillsets of the bank.

Is the financial services sector at a tipping point when it comes to technology? That’s certainly the view of Cyril Cottu, global head of digital and e-commerce in BNP Paribas’ Global Markets business. He foresees exponential growth in data, computer power and connectivity, with these “mega-trends” driving rapid change.

They are also driving much of the bank’s strategy and investment, as reflected in its strides in areas such as artificial intelligence (AI) and its investment last year in cloud-based messaging and collaboration platform, Symphony.

London-based but France born and educated, with a mathematics background, Cottu joined BNP Paribas two years ago having been head of fixed income, currencies and commodities sales at Goldman Sachs. It is not so much a Q&A when we meet as an initial question and then an avalanche of rapid-fire ideas and observations over the next hour or so. But this is far from abstract. These are now the drivers behind BNP Paribas’ day-to-day, medium and long-term decision-making.

There is a big gap at present between the impact that data, computer power and connectivity is having on our personal lives and its impact to date on the way we work, says Cottu. In his sector, “most processes in global markets are inefficient, there is still a lot of voice and manual interaction. Many banks in global market operations are living in a legacy world.” That includes using perhaps 5% of the data that is available.

Data and AI

Now, everything that can be automated will be, he feels, and there will be much greater use of structured and unstructured data, harnessing techniques such as deep learning, data science and natural language processing. AI will provide speed and capacity to detect patterns and trends, make decisions and send out messages to other machines or humans. “In global market operations, this has barely started.”

The convergence of these forces will mean that every system will talk to every other system, which will support more regulation and transparency as well as supporting the massive shift to reduce costs – “everything is linked”, he feels.

AI is needed to interpret the data because this will be beyond the human brain, as today’s eight zettabytes of internet content moves to, he predicts, 40 and beyond in the next two to five years. However, Cottu believes that humans will still need to understand the context and make judgment calls. “AI is not there yet and potentially it could take years.”

There is a need to much better understand customers, trends and risks, leading to “smart actions”. The technology will unlock the complexities of big companies and should provide the capacity for coverage of companies that are currently too small for research.

Collaboration

This is another major area of change, Cottu believes. While in a personal capacity there is a lot more use of messaging apps, such as Whatsapp and Slack, email still dominates in financial services but he predicts its steep decline. Email is highly inefficient for digesting and sharing content so he foresees a shift towards communication hubs that can deal with all forms of data.

He expects a similar transition from today’s static reports, so that they will eventually disappear, to be replaced by dashboard-driven information that is much more relevant and customised.

That collaboration includes working with start-ups. “There is not a single workstream where we are not talking to start-ups with components of what we need,” says Cottu. Last year there were probably conversations with 100 such companies, with investments in a few and a further four or five likely to follow, plus proof of concept studies with between ten and 15.

Banks need humility, he says. “A bank pretending it can do everything on its own would be making a big mistake.” The relationship needs to be a fair and honest one, with open discussion. From a start-up’s perspective, there is often a moment when it realises it can’t be as global as a bank so it makes sense on its part as well to partner.

The other collaboration that Cottu expects is across the sector, so a realisation of the much touted but often more theoretical than actual outsourcing of all non-added value areas. “We need to ask, what is BNP core, what is our value and our skillset? What can we outsource, where can we work together? Let’s outsource what we can, I think this is an industry shift, particularly for regulation.”

The proactive approach to Symphony can be seen as this philosophy in action. It promises a much more powerful messaging system for market players, he believes, which will speed up the goal of sharing structured and unstructured data.

Indeed, Symphony is often described as like Slack for banks (alongside discussions as to whether it is a “Bloomberg killer or an email killer”). It allows users in highly regulated environments to combine encryption and security with online text and voice communications. There is a growing number of third-party apps that can, for instance, display financial data, monitor sentiment on Twitter, and produce visual representations of datasets.

Clients themselves are becoming smarter but Cottu believes only a handful, perhaps ten or 15, are more advanced than the bank for their trading operations, “so for the most part, we will remain a value provider, with a big role to play”.

What does this mean in practice?

Banks are clearly investing in digital and, indeed, BNP Paribas has publicly committed €3 billion to its overall strategy in the next three years. For global markets, this means analysing all processes and identifying what needs to be enhanced and where to innovate. This has led to multiple workstreams but everything converges on the “mega trends”.

Cottu gives the example of the “idiosyncratic” corporate bond market, with its inefficient and fragmented market structure. BNP Paribas, within a project called Omega, is applying AI-based algorithms to try to analyse every piece of information it can from its customers. This is to detect, for any given bond, at any given time, the most relevant and interested customers…

This is an excerpt. The full article is available in the April 2018 issue of the Banking Technology magazine.
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