What Does The Future Hold For Capital Markets Transformation?

What Does The Future Hold For Capital Markets Transformation?What Does The Future Hold For Capital Markets Transformation?

The transformation of Capital Markets is an ongoing process. Advances in technologies are allowing firms operating within the Capital Markets arena to get ahead and differentiate. Harnessing technology’s ability to deliver scalability and rapid access to insight and data, firms have an unprecedented opportunity to drive the Financial Services industry forward in entirely new ways.

Leading banks will need to move beyond purely thinking of digital in the pursuit of cheaper operating costs, and instead rethink and repurpose their organization for a fully digitized economy.

That means:

  • Learning to be sensitive to the changing customer, encompassing the functional, emotional and social needs that together drive their expectations and experiences
  • Being more open and accessible, able to use platforms, talent pools and networks to orchestrate services around their clients, while extending their reach
  • Designing business and operating models around constant change, continuously unlocking investment capacity to invest in innovation, and building a simpler architecture that supports resilience and agility

With many banks already modernizing their legacy systems to take advantage of new technologies, the significant improvements needed to differentiate within their marketplace will come from innovative thinking and rapid execution.  

Fintech is driving the evolution of Capital Markets

There is no doubt that digitization is transforming Capital Markets. As a result, banks are swamped with data, so the challenge now is how to harness new technologies to utilize that data and achieve the best advantage.

One undoubted star of the future is the Cloud. It has already become a major player, promising drastic cost reductions (potentially 30% to 40% in infrastructure costs) and boundless scalability through targeted initiatives. However, striking a balance between efficiency and data security can be challenging, giving rise to the evolution of the hybrid cloud model.

The other side of the Cloud coin is that it’s fueling the Fintech revolution, providing another win for banks. By connecting with this evolving ecosystem, banks can leverage their offerings so they can quickly plug into new solutions.  

Distributed Ledger Technology is not yet seen as an imminent disruptor by banks. However, most recognize its potential as a future agent of significant change, and are making provision in their processes for easy adoption in case of a breakthrough.  

Shaping the future

To harness the full potential of this era of transformation, Capital Markets firms must adopt five organizational principles:

  • Intelligent and automated
  • Data-led and client-centric
  • Open and accessible
  • Agile and resilient
  • Simple and standardized

However, to achieve this, it’s imperative they get their technology strategy right. Therefore, banks’ resources must be concentrated on developing differentiating capabilities in areas that are critical to revenue generation and client retention.

By embracing this new paradigm, old legacy architecture, systems and ways of thinking will be swept aside by the continuous pursuit for efficiency, improvement and legacy modernization. We will see leading banks preferring a leaner and adaptive approach to slowly replace legacy IT, develop new solutions, and seamlessly integrate new assets with legacy through open APIs and microservices.

As technologies evolve, the trend of expediting the transformation within Capital Markets will intensify as banks continue to battle for dominance.