As the muni market relies on technology, there's a school of thought that new systems and processes are favored over personal relationships, sacrificing personal touch for efficiency and automation. However, some market participants argue the contrary, believing technology only further enhances the interpersonal relationships of this highly relationship-based industry.
"The industry is built on relationships, and it's powered by technology," said Josh Rosenblum, head of algorithmic trading at Brownstone.
Technology automates many manual processes, allowing market participants to focus their effort on high-value tasks, problem-solving, and creative thinking, said Abhishek Lodha, director of strategy and innovation at AG Analytics.
"Interpersonal relationships are crucial," he said. "By leveraging technology, market participants, such as analysts, can focus on communication, collaboration, and relationship-building rather than routine data entry."
The automation can be for the entire "lifecycle" of the experience, from pricing and providing liquidity executing a trade, receiving and transferring allocations and operational processes settlements, Rosenblum said.
"The more we can improve and automate those processes," market particpants can offer "a clean, repeatable and an overall better experience for the client," he said.
Brownstone, for instance, has been focused on forming more "strategic partnerships" with the larger
Technology also allows market participants to share more relevant and real-time market information, resulting in more impactful and more valuable conversations between counterparties, which strengthen relationships, said Daniel Kelly, head of municipals at MarketAxess.
"It's not a call to say, 'Hey, here's a bond. It's a call to say, 'Look, according to the technology I have at my fingertips, the pricing makes sense, the structure makes sense. Given what you've told me about your portfolio needs this particular situation makes sense,'" he said.
Technology frees up more time for a personal touch as "it gives you faster access to more information" as well as running scenarios and numbers "that can happen much more quickly," said Jennifer Fredericks, a sales director at SOVLE.
And with technological solutions, it brings people closer together with respect to innovation and partnership, Kelly noted.
The implementation of technology across the muni market happens slowly, but this is not a new phenomenon, Fredericks said.
"We used to calculate debt service payments on an adding machine," but then the market transitioned to Excel, she said, noting it can take time for technology a longer time to be widely adapted in the muni market.
The industry is "a high-touch, high-relationship asset class," and some market participants believe personal touch is lost with technology, Fredericks said.
"It's taken us a long time to get rid of paper, and technology has had a tremendous amount of impact on that side of the equation … but technology makes things less personal," said Mario Marsano, a managing director at Ramirez.
Adopted forms of technology-enabled communication removed the need to speak with someone on the phone and hear their voices in exchange for efficiency, he said.
However, that can lead to confusion, Marsano said.
"When you send an [electronic] message, you can interpret it 10 different ways except the intended one," he noted.
"No one way works for everybody, and no one way is the right way," Marsano said. "There are many different ways to get the same result. It's just a matter of sometimes people don't want to listen to the voice of somebody else on the other side, and they prefer to send a message and they think that that's more efficient."
However, several market participants say the opposite.
"The relationships are at the core and technology is just there to enhance and support those connections, to make us more efficient, more impactful, and ultimately be able to handle more and more workflow as the market evolves," Rosenblum said. "It's not there to replace relationships."
"Bespoke muni technology systems are designed to enhance market communication," said Matthew Gerstenfeld, CEO and co-founder of Munichain. "The goal is to improve connectivity, not complicate it."
Munichain users, for example, "have a clear-cut, organized, predictable, repeatable pattern to collaborate with members," preventing unnecessary errors, he said.
"As sticky notes start disappearing from monitors, we take it as a sign that we're successfully driving tangible value for everyday life in munis," Gerstenfeld said.
"Contrary to popular belief, technology doesn't replace people," Lodha said. "It is a core business enabler, helping you and your company be more efficient and scale up."
