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Technology for
Digital Capital
Markets in 2022

Firms could improve agility, innovation and
competitiveness with five tech design principles.

INDUSTRY BACKDROP: COMPRESSIVE DISRUPTION

Because the capital markets industry is somewhat shielded by large balance sheet requirements, regulation and network effects, firms are unlikely to experience the kind of big-bang disruption caused by companies like Uber and Netflix in other industries. Nonetheless, three key trends are creating a perfect storm of “compressive disruption” that’s forcing change and reinvention in capital markets:

  • Stagnating revenue: Following the global financial crisis, top-tier investment banks and boutique advisory houses have seen their pool of revenue stagnate or fall in real terms

  • Growing competition: While the industry’s revenues are stagnating, capital markets players are still dealing with the rise of non-bank competitors in both primary and secondary businesses.

  • Weak returns: Capital requirements for balance sheet-led businesses have increased so much that they have destroyed shareholder value generation at even the purest of investment banks.

To offset a perfect storm of "compressive disruption" in the capital markets industry, firms could apply five technology design principles to get ahead.

FIVE TECH DESIGN PRINCIPLES

Between now and 2022, the capital markets industry will be shaped by automation, self-service expectations, and the continued rise of non-bank liquidity and execution providers. In this context, technology offers a way for firms to get ahead. Industry leaders will adopt an approach to technology that is based on five design principles:

  • Intelligent and automated, deploying technology and organizational designs that use machine intelligence to automate and amplify human creativity and intuition. Intelligent and automated, deploying technology and organizational designs that use machine intelligence to automate and amplify human creativity and intuition.
  • Data-led and client-centric, expanding the catalogue of data that’s captured and analyzed to create real-time views of client needs and behaviors, and inform service design. Data-led and client-centric, expanding the catalogue of data that’s captured and analyzed to create real-time views of client needs and behaviors, and inform service design.
  • Open and accessible, encouraging customers and the ecosystem to engage deeply and seamlessly with the organization, and extending their reach and capabilities beyond the boundaries of the firm. Open and accessible, encouraging customers and the ecosystem to engage deeply and seamlessly with the organization, and extending their reach and capabilities beyond the boundaries of the firm.

  • Agile and resilient, designing a “living business” that assumes uncertainty and can adapt with pace and purpose to changing market and customer needs. Agile and resilient, designing a “living business” that assumes uncertainty and can adapt with pace and purpose to changing market and customer needs.

  • Simple and homogeneous, removing unnecessary complexity and friction across the organization by outsourcing and leveraging utilities where possible. Simple and homogeneous, removing unnecessary complexity and friction across the organization by outsourcing and leveraging utilities where possible.

Becoming a digital bank means forming strategies empowered by technology.

GET STARTED

Change is neither cheap nor easy, but firms could begin to align their organizations with the five technology design principles mentioned above. Here are four key ideas for getting started that could unlock the capacity required to invest in new business—based on Accenture's experience and project analysis:


  • Digital ecosystem: The emergence of digitally enabled ecosystems that provide component service across technology, processes, skills and data. Digital ecosystem: The emergence of digitally enabled ecosystems that provide component service across technology, processes, skills and data.
  • Intelligent enterprise: A virtual workforce that independently completes customer-facing and operational tasks to provide increased enterprise scalability and agility. Intelligent enterprise: A virtual workforce that independently completes customer-facing and operational tasks to provide increased enterprise scalability and agility.
  • Client-centric analytics: Real-time analysis and visualization across vast datasets, enabling greater customer insight and responsiveness. Client-centric analytics: Real-time analysis and visualization across vast datasets, enabling greater customer insight and responsiveness.

  • Digital settlement: Digitized assets that leverage distributed ledgers to optimize post-trade settlement, re-architect processes and release trapped capital. Digital settlement: Digitized assets that leverage distributed ledgers to optimize post-trade settlement, re-architect processes and release trapped capital.

As we journey toward 2022, technology will be a way for firms operating in the capital markets industry to get ahead and differentiate.


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