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Ex-J.P. Morgan CTO: Banks are a long way from catching up with Google or Facebook

regtech, compliance, legal, eDiscovery, UBS, Och-Ziff, banks, hedge funds, banking, bankers, J.P. Morgan, JPMorgan, Yerra Solutions, automation

Moving from a big bank to a regtech service provider is a dramatic change.

Adi Prakash has spent most of his career working within senior technology roles at large financial institutions. Most recently, he was the chief technology officer of legal and eDiscovery at J.P. Morgan, and for all the talk of banks morphing into technology companies, he says they have a long way to go before they’re real competitors.

“Big banks are bureaucratic and risk-averse, and their sheer size, inertia and machinery prevent them from driving innovation,” he says. “At banks, there is a desire to be innovative, but I think what gets in the way is twofold.

“Over the years there has not been enough investment in technology and the skillsets of the folks working in tech.”

Banks say, “Let’s do what Facebook and Google are doing,” but that takes time and culture change.

Prakash, who also worked at UBS and Och-Ziff Capital Management, is now the chief innovation officer and head of client services at Yerra Solutions. It’s a regulatory technology company that provides consulting, managed services and technology services to global healthcare, pharmaceutical, automotive and financial services clients for legal, eDiscovery and compliance.

“There were disagreements about where I felt we should go and J.P. Morgan felt we needed to be,” Prakash says. “Over the last six months, by virtue of being in my role, I’ve been interacting with various firms, including Yerra, and I feel there is a void to be filled in terms of true innovation.”

A computer scientist who got his start as a software engineering, Prakash moved to New York for grad school, and his first internship was at a hedge fund. After graduation, he worked at General Motors, but felt the pull back to the financial services industry.

“I stuck within financial services in technology ever since, on the sell side and the buy side,” he says.

Prakash worked at UBS almost eight years, first in compliance technology, eventually working his way up to become the global head of trade monitoring, electronic surveillance and control room technology, and then he transitioned to serve as the global head of the eDiscovery development function.

“There were a number of management changes, and I felt I wasn’t challenged enough,” Prakash says. “I wanted to go back to the hedge fund space.”

He joined Och-Ziff Capital Management, working in legal, compliance and reference data as the head of portfolio finance and liquidity. His responsibilities ranged from Treasury, legal entity management, regulatory reporting, pre-trade, intra-day and post-trade compliance, anti-money laundering (AML), sanctions, tax and electronic surveillance functions.

“Hedge fund bureaucracy doesn’t exist to the same extent [compared to big banks], but strategic thinking was lacking,” Prakash says. “Being able to invest in something in the tech space with the payoff three to five years down the road was not there.

“Hedge funds absolutely have cutting edge technologists, experimenting and actually using the latest technologies, and it was a great opportunity to work with them, but the investment horizon is limited to six to 18 months,” he says. “There’s no appetite to invest in something that does not show tangible returns in the short term.”

You’ve got nothing to fear from automation

Prakash says automation has two primary applications: making business decisions and executing back-office functions, including compliance and legal tasks such as contract creation and deciding what securities or assets to use as collateral. He feels that automation’s reputation as a job killer is overblown.

“People are worried about jobs being automated away, but it’s not really practical or on the immediate horizon,” Prakash says. “Your job shifts in terms of where your time is spent, and over time, it’s better for the industry and individual firms, because they can move employees to higher-value tasks.

“The total number of financial services employees hasn’t seen a significant or drastic reduction due to automation,” he says. “Professionals switch to higher-value tasks.

“Firms retool – they don’t’ replace them altogether, and that isn’t happening anytime soon.”

Photo credit: Sergey_Nivens/GettyImages

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