CIO Insider

CIOInsider India Magazine


Trends In Capital Markets

Pankaj Purohit, Group CIO, Motilal Oswal Financial Services

Today, digital is omnipresent and it is changing the way businesses are interacting and engaging with customers. It is redefining Business Strategies in terms of exploring innovative business models and at the same time creating new and unique revenue models that will lead to unprecedented growth. Digital Transformation and Innovation is providing a paradigm shift which is helping organizations especially Financial Services to launch innovative products and services in order to accelerate their growth and provide an edge over direct and indirect competitors.

With the advent of digital era, there was increasing pressure on Financial Services to persistently innovate and implement plethora of digital initiatives which will improve the customer experience and steer the business to increase in revenue. Capital Markets, Banks, Regulatory Bodies and Investors have taken multiple precautionary steps to ensure they prevent another global financial recession and also history is not repeated. They are also ensuring that industry giants stay competitive in the age of technology-driven Financial Technology Services organizations also known as FinTechs.

FinTechs and large Capital Market organizations are focusing on Intelligent Solutions in order to provide better operational efficiency and cost optimization. Intelligent solutions like Artificial Intelligence (AI) including Machine Learning, Deep Learning and Robotic Process Automation (RPA) are enabling businesses to achieve efficiency in manual, old and taxing processes related to trading and other activities. An interesting way to innovate for Capital Markets would be to identify what customers are demanding and expecting which could be gathered from multiple data points and leveraging this information to derive deep customer insights. These customer insights will enable organizations to create actionable strategies and come up with lucrative products and services consequently leading to fulfilling their requirements and increasing customer satisfaction. Also, Capital

Market organizations generate tremendous amount of data, it is imperative to have stringent information security policies and compliance to keep the confidential data secure.

There are multiple technological trends in Capital Markets that are disrupting this industry. These are:

1. Smart/Intelligent Automation: Financial Services companies are taking intensive efforts to automate their trade-related operation that leads to inculcating Robotic Process Automation (RPA) and Intelligent Automation using software robots. Due to fierce competition, Businesses are looking forward to reduce operating expenses at the same time increase the process efficiency thereby increasing the productivity of the organization.

Fintechs and large capital market organizations are focusing on intelligent solutions in order to provide better operational efficiency and cost optimization

2. Smart Contracts will make Trade Settlement Efficient: The trade settlement is quite a lengthy process in capital markets and it undergoes a delayed transaction time due to involvement of multiple intermediaries, clearance stages and regulatory compliances. In order to enhance this process. Smart contracts works on a distributed ledger technology (DLT) which automatically executes on fulfillment of an underlying criteria. This enables the settlement process to be executed in real-time and at the same time eliminates intermediaries.

3. Innovative Digital Revenue Streams: Younger generation especially millennials believe in being independent which makes them more inclined towards technology leveraging digital tools to enhance their decision making capability. In order to make financial decisions and catering to their demands, it is important for capital markets companies to launch intuitive platforms along with providing services that allow the younger generation to take their own decision. Unique and innovate revenue streams should be experimented in order to cater to the new age customers by creating digital platforms and providing enticing services.

4. DevOps Culture: Capital Market companies are strategizing to launch new product features and update existing products as soon as possible so that they are first in the market. This poses a huge challenge and pressure for the IT team following the legacy process of development like the SDLC model or even agile for that matter. It is imperative for the development team to work in sync with the operations team leveraging latest tools to expedite the development and deployment process. This gives rise to the DevOps culture and how it is impacting end-to-end development process.

5. AI-based Cybersecurity: The threat of cyber-attack is increasing at alarming pace due to the increasing abilities of hackers of finding vulnerabilities. Considering the tremendous volume of data generated, Capital Market industry is slowly shifting towards Artificial Intelligence (AI) and Machine Learning (ML). Models are created in order to generate a pattern in the data and this helps to detect and prevent any anomalies that could be a potential threat to the organization. AI can also help in determining vulnerabilities by understanding how the internal systems interact with each other and based on the intelligence, it detects loopholes.

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