Bank of Montreal’s (BMO) recent acquisition of a New York-based electronic trading firm highlights its commitment to fintech innovation, says Moody’s Investors Service.
In a new report, Moody’s called BMO’s planned buyout of Clearpool Group Inc. a positive “because it will allow the bank to deliver modern, cloud-based electronic trading with visual data analytics and customizable algorithmic strategies, enhancing its existing electronic trading platform.”
The terms of the transaction were not announced, but the rating agency said that it believes the deal is not material to the bank. From a strategic point of view, Moody’s applauded the deal.
“Acquiring a fintech provider such as Clearpool helps BMO increase operational efficiency, providing digital infrastructure that enhances institutional clients’ digital experience, which is an increasingly important element of client-retention strategies,” Moody’s said.
Automated trading is the sort of service that is vulnerable to fintech disruption, Moody’s noted, because it is not as regulated or as capital-intensive as other financial businesses. To compete, “BMO and its peers will have to keep investing in smarter infrastructure, including infrastructure provided by fintechs such as Clearpool,” Moody’s said.
Moody’s noted that the acquisition highlights BMO’s “commitment to significant fintech initiatives, which help fend off new and incumbent competition and, in this case, maintain relevance with institutional investors.”