RESEARCH REPORT

In brief

In brief

  • Our new analysis casts light on a changing Capital Markets industry by examining three key disruptive trends, and what to do about them
  • The shifting balance between players at the core of the capital markets industry
  • The looming impact of AI and distributed ledger technology
  • The huge savings that could be realized through further value chain digitization


Capital markets industry in flux looks to the future

A decade after the financial crisis, the capital markets industry looks as profitable as ever. But, while the industry as a whole creates around $1 trillion in revenue and over $100 billion in economic profit each year, Our latest analysis shows the distribution of this profit within the capital markets industry is far from equal.

While many buy-side and market infrastructure players are highly profitable, on the sell-side, the field has split. Some investment banks (a few very large, and many mid-sized and small players) are creating shareholder value, while other sell-side players can’t say the same.

Moreover, cost structures across the entire industry are highly fragmented—to an unsustainable degree—making the industry prone to future disruption.

Capital Markets Vision 2022 | How digital disruption is reshaping the future of the industry

Why the capital markets industry is ripe for change

Capital Markets Vision 2022 | Overview by Michael Spellacy

Future disruption will emerge on three principal fronts:

Capital markets trend one: A reshaping core

The transition to technology-intensive market models is shifting the balance between sell-side organizations and market infrastructure players. More efficient digital market structures are challenging incumbents to rethink the paradigm of "lucrative inefficiency" which has been prevalent for years.

Capital markets trend two: Technology-led innovation

Artificial intelligence and distributed ledger technology are set to profoundly transform capital markets over the next few years. We believe their biggest impacts—helping organizations find new efficiencies and target new revenue streams—are still to come.

Capital markets trend three: Digital value chains

Electronic trading has just been the start in digitizing value chains; we see ample digitization needs and opportunities moving beyond top players throughout the whole industry on areas such as client management, advisory/sales and post trade.

What will be the impact of these catalysts for future change? Every capital markets organization, however profitable, should expect to have its business and economic models challenged in the years ahead to 2022. They must be ready to adapt their own businesses to be ready for the future, beginning with three key questions:

1. Shaping the New

How is this new capital markets environment evolving?

2. Operating in the New

What will it take to operate effectively and thrive in the new environment?

3. Journey to the New

What does the change journey look like for our own organization?

Every capital markets firm should expect to have its future business and economic models challenged by 2022.

From our analysis and a series of in-depth conversations with leaders across capital markets, we have developed a framework of 17 key considerations to guide capital markets players’ strategic thinking on these questions.

Encompassing everything from transforming investment products and enhancing risk and compliance to deciding which location strategies to adopt, this framework offers a comprehensive structured methodology for shaping a successful journey to a radically different kind of capital markets industry in the future.

Michael Spellacy​

Senior Managing Director, Lead – Global Capital Markets


Markus Boehme​

Managing Director


Julian Skan

Senior Managing Director

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