Fintech is the future of global finance - Morgan Stanley

"Sustainability and fintech may be the key words for the future of global finance, which has changed drastically in the past 10 years," said László Hajdu-Németh, operative director of Morgan Stanleyʼs Budapest office. "Digitalization has opened new frontiers in the classic banking fields. Services have developed accordingly, in order to accommodate changes that have occurred on global markets."

This year was the first time Morgan Stanley has supported TEDxDanubia in Budapest. The main question of the conference, held on November 13, was "What if?" Experts from different professions investigated the question in depth.

"The fintech sector has become one of the most dynamically developing sectors, while sustainability and new areas such as green bonds have also gained importance," Hajdu-Németh said, adding that the change is happening very quickly, and the need for innovation today is greater than ever.

"The understanding of changes around us, as well as their accommodation, carries an innovational power that determines whether a company will stay ahead or fall behind in the global competition. Budapest plays a significant role as the key technological and analytic center of Morgan Stanley, to ensure the company stays among the leaders," Hajdu-Németh noted.

From its initial supporting role, IT has turned into the leading factor in decision making in several financial areas, the Morgan Stanley director explained. Approaches to IT security have also changed, he added, as ten years ago defense against hackers and external attacks was the main role of security. These are still important today, as attacks are becoming more sophisticated nowadays, posing new challenges to experts. However, the number of IT tasks for ensuring sustainable financial operations are also gaining importance,  with fields such as stricter control of internal access, the so-called "privileged access management."

Today, services which were formerly accessible with the help of IT systems worth hundreds of thousands of forints are accessible by smart devices costing a few thousand forints, observed Hajdu-Németh. Among clients, devices are appearing in increasing numbers, bringing new IT needs and challenges, which need new solutions from job positions which did not even exist a decade ago.

In the case of internal jobs, remote mobile access for bank systems and the spread of home working are bringing previously unknown IT security challenges, the Morgan Stanley director added.

Green investments

Green and sustainable investment opportunities are areas that are constantly gaining strength, according to Hajdu-Németh. In the ten years after the World Bank released the first green bond (a bond that finances sustainable, climate-friendly projects), the market for these eco-friendly financial products grew exponentially. The value of green bonds released in 2017 reached USD 161 billion, according to Moody’s and the Climate Bonds Initiative, representing a 74% growth since 2016.

According to the same sources, the number may reach USD 250 bln this year. Morgan Stanley introduced its institution for sustainable investments in 2013, providing services focused on green business areas for its clients.

Today, the number of analyses available related to investment strategies and security is much higher than 10-15 years ago, and cooperation with overseeing authorities is even tighter. Besides requiring the involvement of the appropriate number of mathematical modeling experts and risk analysts, this also poses interesting IT and fintech challenges, noted Hajdu-Németh.