A Top Fintech CEO Explains Why Financial Institutions Fail To Innovate

In the stark twilight following the financial crisis, Tradovate CEO Rick Tomsic saw that the financial services industry wasn't fully adapting to traders' changing technological needs.

Traders are increasingly using mobile and web apps to keep up with the market and place trades, and much of the futures brokerage industry hasn't kept up with that change, according to Tomsic.

That's one of the reasons why Tomsic developed Tradovate's platform, which allows futures traders to place and cancel orders on the go and at their desk.

Fallout From 2008

In an interview with Benzinga, Tomsic offered an explanation for the lagging pace of innovation at financial services firms in the wake of the 2008 disaster.

"The zero interest rate environment and contracting volume post-2008 caused compression in revenues and subsequently profits for many firms," Tomsic said.

The ensuing landscape caused firms to focus on survival, rather than innovation.

"Firms were forced to consolidate," Tomsic said. "Their efforts focused on consolidation-type efforts, like updating back-office systems, integrating client bases, so on and so forth. That's why there weren't really any significant improvements in trading technology in these firms for the last decade."

That stagnation created an opening for firms like Tradovate to offer traders technological upgrades, Tomsic said.

Learn more about how Tradovate took advantage of that opening here.