A couple of months ago I dealt with a major life && career decision. I needed to decided between going back to being a financial/investment analyst (or a similar role), or spend the next couple of months developing my programming skills && eventually learning to code.
As I mentioned during my previous blog, I had almost 4 years of experience in the industry, from well-known firms. Every week I was receiving offers to interview at different places from multiple recruiters and headhunters trying to lead me into one of their roles. The recruiters were impressed with my experience and involvement with the CFA institute. [As well as my awesome personality 😉].
After consulting with friends, family, old colleagues, and mentors, the advice I received was almost unanimous. They were all suggesting me to go back into the workforce && to get another job in Finance. Teaching myself to code online, or paying for a bootcamp, in order to get a job at a startup as a developer without a computer science background was impossible. I noticed they went in disbelief when I made a comment about the price of a coding bootcamp. They thought I was doing some crazy-person talk (I tend to do this from time to time...). However, what some of them did realize is that I had worked in finance.
Settlements && Derivative Operations
My first investment related position was as Derivative Operations Specialist (fancy title huh?). This position taught me plenty about the industry in a very short amount of time. A very fast paced and intense environment was the perfect place for me, a young kid trying to absorb everything. Post-trade processing occurs after a trade is complete. At this point, the buyer and the seller compare trade details, approve the transaction, change records of ownership, and arrange for the transfer of securities and cash. I was in the middle of all these activities. I was on the phone for half of the day processing and clearing trades. There were days when things were very smooth && quiet. This gave me the chance to talk fantasy football or take a nicer lunch. Sometimes I could not even had a lunch. THERE WERE SO MANY TRADE ISSUES... It could take us the ENTIRE DAY to fix just a couple of issues. I loved this role! I really did. At least for a while though. We were moving millions of dollars weekly. My role was highly important for clients and for others in the derivatives market.
You might be wondering, how does all of this relate to coding? Well, let me explain you something about trades. Many securities trades are done over the phone, by brokers, or portfolio managers. The ability for mistakes is inherent, despite the many years of experience, or the trader's skill. The chance for small mistakes, human error, to this day remains high. My position allowed the buyer and seller of the securities to find out and rectify these errors. In addition to matching the details of the orders, I needed to make changes in the records of ownership and authorizing payments for our custodians...THIS PROCESS COULD BE COSTLY && COMPLICATED. I often wondered why were clearing trades this way. I knew there was another method && more efficient way to do our job.
Software had been making the world a more efficient place. After a couple of months working, as Derivative Operations Specialist, I heard about other companies using better and faster technology than my firm. Apparently, the big banks that you're familiar with had been developing this technology for a while. It made a lot of sense though. I had heard stories of brokers, or people in a similar position as mine, making huge && costly mistakes for their companies. I always thanked God that I never made one of those mistakes. People never forget the person who makes a mistake that big. It happens quite often though.
Blockchain in Trade Finance
"Blockchain, blockchain, blockchain..." I remember hearing those words coming out of one of my colleagues. This technology was making a lot of noise. At the same time, bitcoin ($BTC) was moving rapidly to the moon. People were expecting bitcoin to reach over 100k during 2017. Blockchain promised to be able to streamline the trade finance process. If you are not familiar with the technology is important to understand how it works. A blockchain is a data structure that allows the creation of a digital ledger of transactions. This ledger can be distributed amongst a digital network by using cryptography. Each participant on the network can securely amend that ledger without the need for a central authority.
Because a blockchain is updated quickly by each participant on the network to reflect the most recent transaction, it removes the need for multiple copies of the same document of information. It also removes the need to have someone like myself going over thousand of trades per week. It reduces the need for companies to have analysts doing tasks that could be simplified && automated by the technology. It also reduces the potential risks of analysts making entering the wrong information. The technology has the potential to reduce save companies a lot of money. Firms can also decide retrain or find candidates with different skills more suitable for the upcoming changes.
So are you learning to leaning to code because of Blockchain?
Nope... well... blockchain is not the main reason. It is a good example of how innovative technology could be. Asset management firms have been making huge profits from processing trades and the derivative market. Yet, for a while there was not much innovation in this department. Technology kept moving faster and faster. The finance industry did not keep up with the technology. I think this the reason why there has been a lot of #fintech startups popping up. These startups are bringing technology and the financial services together. Blockchain is just one example of how an industry such as trade settlement could be vastly improved. There's probably hundred of different industries that could be improved with the use of programming && technology. We all have worked at places where technology could be very disruptive, correct?
I truly believe that software is the future and I want to learn how to help build some of it. Even if I do not become a great software developer, at least I would like to feel that I made the right choice, given everything I mentioned. Nothing guarantees that I will become a software developer. It is not an easy industry, but finance was not an easy industry either. Perhaps, I might end up going back to work in finance. If I do though, I'd probably be the person with the most programming knowledge among my colleagues. This is dangerous for my future colleagues. Knowledge is power! I have witnessed this. We live in a world constantly changing. The industry might no need me right away, but I am sure my skills will be needed eventually && I will be ready to show everyone how I made the right decision. @alexfrompalmsprings will not regret going from #FinanceToCoding!
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