As the world becomes increasingly digital and interconnected, Capital Markets organisations face pressure to become more agile, automated and data-led.

However, the industry faces several challenges, including increasing regulatory requirements, evolving client expectations and the emergence of new technologies. Now more then ever we want to know what does the future hold for Capital Markets?

A 2019 report ‘Technology and Innovation in Global Capital Markets’ from PWC, in partnership with the Global Financial Markets Association (GFMA), saw 50 investment banks surveyed to find out the technological trends expected to impact the industry. It identified key technologies that will continue to drive innovation in Capital Markets and help create the investment banks of the future.

Data & Analytics

Put simply, data & analytics is the control and management of all core data assets. For Capital Markets, this includes product, account, transaction, position, client or employee data. From this, insights can be generated to help improve decision making.

Banks are increasingly recognising that better data & analytics capabilities are critical enablers to unlock other technology opportunities, such as cloud computing and artificial intelligence.

Cloud Computing

The report found that the implementation of cloud computing platforms is expected to remain a priority in Capital Markets in the near- and medium-term.

There’s a good reason for this; cloud computing, like data & analytics, is an enabler for other innovations and new technologies. For banks, cloud computing has many clear benefits, including scalability, transparency of costs and the simplification of application portfolios.

While cloud computing adoption, whether that’s private, public or hybrid, is set to continue in Capital Markets, uncertainty remains regarding matters of regulation and security.

Artificial Intelligence (AI)

It’s expected that AI implementation, particularly in trading and risk, will be increasingly embedded in Capital Markets within the next five years. It will continue to target capabilities including natural language processing (NLP), optical character recognition (OCR), trading risk analytics and social networks analysis.

However, as stated in the report, the benefits of AI, which include cost reduction, risk mitigation and optimised decision-making, can only be realised if investments and improvements are made in data management, mainly how it’s accessed and its quality.

Driving Innovation

For the benefits of such innovative technologies to be realised, engagement models with technology partners need to be assessed to ensure optimum communication, collaboration and, critically, an acute understanding of the unique challenges facing the Capital Markets industry today.

Such emphasis on relationship-building has led to a rise in nearshoring, which sees projects performed by external 3rd party technology teams in close geographic proximity. Its rise in popularity is due to several factors including cultural similarities, enhanced communication, access to talent, minimal time differences, fewer language barriers and the ease of accessibility for onsite visits.