In capital markets, the only constant is change. With two months of a new year under our belt, I’ve picked out six key actions that firms need to take to stay competitive and ensure resilience in 2021 and beyond.
Digital technologies like open APIs, real-time messaging and automatic data standardization will allow data to flow across different sections of the industry – between enterprises but also within the enterprise from front to back and back to front – unencumbered. From a technology point of view, you no longer have to update the code base – you can use the cloud to take down the barriers and plug in other platforms.
Digital also supports a better customer experience because you can broaden access and provide further tools. For example, now you can take your banking capabilities into wealth or asset management. That also opens up the horizons for your business.
Innovation is just another word for creativity. And advanced technologies such as artificial intelligence are how you turn those ideas into reality.
We naturally leverage tech to be innovative because we’re a fintech. For instance, we’re challenging our product management teams to talk to their teams for more blue-sky ideas. But you can also be innovative by coming up with new features, such as doing things in adjacencies to offer more holistic services or adding a new asset class into previously manual flows.
The key, of course, is getting value out of innovation. AI, for instance, offers value beyond scanning large amounts of data for patterns or taking automation a step further for even faster processes. If you can connect different AI systems, they can reinforce each other and pick up patterns that they wouldn’t have identified on their own.
Advanced technology can also reduce your total cost of ownership and the cost of doing business. For example, AI technology is leading the world in recognizing and eliminating false positives in data patterns.
It can enhance the customer experience by giving your customers what they want with the latest tools, from biometrics to managing their experience based on their own usage.
Evolve your infrastructure
Historically, to create a product, you might have had four or five different departments, each with its own technology and its own focus. Typically data would be passed between them manually or in some sort of data batch cycle.
Now we can take down the silos and make those products into components of an extendable “platform.” For example, as asset classes converge, specialist products for each asset class should converge into a cross-asset platform with data flowing in real time without friction.
Move to the cloud
Cloud is becoming more widely adopted – even the front office is starting to embrace the cloud and SaaS. Now the question is, how do you truly optimize the power of the cloud? Our own modernization efforts are moving towards cloud-native technology, which allows you to take even greater advantage of the scalability and expandability of the cloud because the technology is built with cloud at its core.
Outsource for value
Firms are recognizing that outsourcing and managed services such as Business Process as a Service free up their resources to focus on strategic areas while reducing costs and increasing efficiency. In addition, these services are expanding into areas that firms were historically reluctant to outsource, such as client reporting. That will only accelerate as we move further into 2021.
Prevent, protect, comply
Cybersecurity risk was a concern long before the pandemic began. But the threats have become even more pressing as cybercriminals step up their attacks.
Meanwhile, the widespread adoption of work-from-home arrangements has created additional vulnerabilities. Firms have lost some of the controls they had when their teams were in the office physically, with people who were monitoring them. In addition to the loss of supervision, there’s also risk of exposure of sensitive data because the vast majority of people working remotely will be using Wi-Fi, which creates digital cyber risk, even with VPNs. One of the ways regulators will respond is by heightening their scrutiny of e-communications, thus requiring yet more attention from already stretched compliance teams.
Finally, as firms globalize more, there are jurisdiction-specific data privacy laws, such as GDPR. With the cloud, sensitive data can be stored locally without the overhead of a company-specific data center and operational global scale can be realized.
As we enter a new era post the effects of the global pandemic, it’s clear that technology, combined with enhanced services, will continue to evolve in order to support the new shape of the capital markets industry. Service-based fintechs, combined with global infrastructure providers, must support the industry with modernized, innovative service platforms that deliver real benefit to their customers and the end consumers.