If a 17-page report could ever sum up the state of the world’s capital markets, and the operations that underpin them, this one by US-based insights firm Datos is not a bad bid. Exploding artificial intelligence and new risk paradigms are just two of the trends driving a rapid redefinition of how businesses see their roles – and select their partners.
“Cloud providers are branching out and creating cloud-acceleration partnerships with some of the largest financial services firms in the world. Consider AWS’ partnership with Nasdaq, Microsoft’s partnership and investment in the London Stock Exchange Group (LSEG), and Google’s relationship with Deutsche-Börse,” observes Datos Insights in its report, accessible here.
Slotting artificial intelligence (AI), higher interest rates and private markets as the three key themes that weave everything together, the report ventures into a list of ten trends. With the complete scope being capital markets on the whole, its post-trade body merits plenty of attention. “Dislocated settlement cycles may leave the industry with a major hangover,” notes the editor on the point of T+1. It is observed that manual post-trade processes are pushed to their limits, calling for innovation, and that regulatory reporting is in a transformation: leveraging analytics and automation “to turn compliance obligations into a competitive advantage”.
Risk is increasingly in operations – and reputation
Overall, Datos is seeing “the rise of new risk paradigms” across the industry:
“Cyber and the broad umbrella of financial risk remain top-stated priorities, but with the rapid expansion of generative AI, growth in outsourcing, and consolidation of service and solutions providers, Datos Insights sees operational and reputational risk management getting more airtime in 2024. … [T]he focus on operational risk will increase across the board, bleeding into how firms build their business continuity plans.”
With a nudge to an old software-industry adage that “everyone is in sales”, the house sees today’s capital markets ready for noting that “everyone is in risk management”.