Week 2 – Thoughts on the state of finance

Our second week of the NYC module brought us to the world of consulting firms and finance. My favourite visits were to the PE firms, General Atlantic and Zephyr Management, and to the Times Square HQ of Ernst and Young. We were lucky to meet industry professionals with deep and extensive insights into the functioning of the global economy and we also received career guidance on the way. Some of us were challenged by Stephen Ibach’s perspective on the future of finance as he shared his critique of the established financial services firms after having spent 17 years in investment banking. Seeing the new agile fintech firms emerging is indeed an interesting novel trend, but I have a feeling that the IB establishment is also here to stay for some time to come.

The post-2008 finance world still has a lot of open questions and the experiences of week 2 got me thinking about some of these issues. In my opinion, we continue to witness growing and evolving large-scale complexities characterizing our financial system – phenomena that are pretty difficult to decode and grasp fully. It is not only the transnational flows that add to this labyrinthine state of affairs, but the increasingly blurred lines among the traditional subsystems of our entangled financial universe, coupled with the emergence of technologically enabled “new finance” segments. The big theoretical debates of the 20th century are of little help in today’s financial world in the age of big data and algorithmic trading that is riddled with systemic risk. These are the reasons I find this sector so interesting and consider worthy of learning more about.

In this complex world, finding the fine line between maintaining the integrity of global financial markets and encouraging a healthy amount of risk-taking to avoid suppressing the much-needed creativity that warrants economic recovery is a hard task. Considering that the complexities in the system are probably impossible to grasp, I really appreciated the advice we received at Zephyr Management. The partners warned us to be respectful of macro trends and look for niches where prices and opportunities are not in sync, as there lays the business worth pursuing. Their modest approach of not chasing after being the best and the biggest brought them success in harnessing non-trivial opportunities where other firms didn’t look for, hence didn’t discover the business potential. It also reminded me of a smart quote from one of the most famous Indian economists: ‘the world is always second-best at best’.

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