Trading decisions were once made off the back of hushed conversations between business insiders. Today, technology has impacted how major market players make decisions and, in turn, the fundamental rules of physical and financial commodities trading. It has also driven digitalisation, which is the enablement, improvement and transformation of processes, operations and activities in a business through the use of digital technologies.
Digitalisation has not only changed the way businesses operate, but also the skill sets that companies demand to reach their business goals. Buzzwords like ‘data science’, ‘predictive analytics’, ‘machine learning’ (ML) and ‘artificial intelligence’ (AI) now influence core business strategy decisions at the highest levels of commodity and energy trading firms, consultancies and brokers.
In most companies, technology divisions report to the chief financial officer. However, recently, we’ve begun to see chief information officers (CIOs) and chief technology officers (CTOs) reporting straight to either the chief operations officer or chief executive officer. This is because CTOs and CIOs are becoming increasingly central in making strategic decisions for operational and overall business functions. Technology drives these initiatives and technologists can assess current processes in order to proactively engage with the business and not just react to a singular business need.
This movement away from a silo mentality has changed the type of professionals hired across different functions of businesses in commodities. Technologists with backgrounds in computer science, or those from other STEM subjects with a knowledge of coding, are now being placed in front office roles or interacting with individuals in these positions on a daily basis.
There are a few key areas where we see a talent gap due to digitalisation processes. First, there’s a need for technologists with the ability to communicate with the business, identify business pain points and rationalise a business case for the creation of a certain tool. Business analysts are no longer hired to scope a tool for a year before handing it over to a development team to design and improve. Instead, there’s a higher demand for technologists to sit down with the business to scope, architect, engineer, deliver, test and repeat.
Secondly, analysts with the ability to code are in increasing demand. Whether it’s manipulating data or guiding trading strategies, companies are eager to upskill current analysts or bring in new team members fluent in VBA, R, Python and SQL.
Thirdly, and most importantly, as trading strategies are driven by advanced and predictive analytics modelling, it’s an increasingly familiar sight to see data engineers, data scientists, analysts and traders working side-by-side on modelling, analysis and the development of a coherent, singular, well-informed, analytics-driven trading strategy.
Across the commodities trade cycle—from securitisation, decision support, position generation, execution and beyond—the systems, tools and processes that a commodities trader uses has changed. Instead of technologists being viewed as a support function with expertise in redesigning and engineering of applications or supporting hardware and software, they are rightfully being viewed as key way to add value. And a proactive approach to the way technology is used in business, and the innovative ways that data, AI, ML can be applied, will begin to have a dramatic effect on the bottom line of trading desks.
Digitalisation is shaking up the world of commodities, so it’s hardly surprising that the skills needed in organisations are rapidly changing. With this new focus on technology, professionals with a background in this space are now highly sought after and becoming essential to business strategy. This is a fast-moving space, but technologists can now step into an organisation with the knowledge that they’ll have a real impact on business functions, from the leadership table down.
by Proco Commoditiesview my profile