Igniting Digital Transformation in the Capital Markets: Embracing Fintech
The industry’s future survival increasingly demands radical change in business practices and procedures. To achieve this transformation, firms will need to harness innovation. Fintech needs to shift from a perceived disruptor to an enabler of existing business practices.
This article was written by Alexander Tabb and originally appeared on TabbForum. Link to original article here.
If you speak to anyone on Wall Street today, you will hear the same refrain: “It’s tough out there.” Whether you are a global bank, exchange, or long-only asset manager, the current business environment is challenging, to say the least. The institutional capital markets continue to face unprecedented headwinds from the combined forces of regulation, market volatility, disruptive technology and an ever demanding client base. The industry’s future survival increasingly demands radical change in business practices and procedures.
From M&A to asset management, most areas of financial services have remained largely immune to the technological overhaul that other industries have been forced to address. Today, however, with margins falling and regulatory obligations increasing, capital markets are finally under severe pressure to change. Siloed, legacy technology and inconsistent data sources strung together across business and IT cannot deliver the enterprise-wide visibility now required, and hamper organizations as they prepare for the digital age. To transform business models and achieve success in the digital age, firms will need to move technology to center stage, as an integral part of their strategic visions.
Automation in the capital markets largely has focused on trading, but now it must spread across the lifecycle of a trade, from the front office to the back office. Firms today must collect, collate, store, retrieve, analyze and interrogate data constantly; they have to get smarter at organizing, sharing and evaluating data, workflows and processes across the financial services value chain. Those that implement technically agile data strategies will derive valuable intelligence from their data, which will differentiate their businesses.
To achieve this, firms will need to harness innovation. Fintech needs to shift from a perceived disruptor to an enabler of existing business practices. Disruptive new business models, products and services now need to be incorporated into incumbent organizations and market norms to understand, address and monitor the new risks and challenges. Financial services organizations have to fully embrace the digital transformation that has driven improvements in productivity and engagement across other sectors.
But the capital markets’ digital transformation is not a static one-off project – it is a continuous evolution that will ultimately revolutionize every financial services firm’s strategy. Though innovative, fintech risks solving imaginary problems while real headaches go unnoticed, preventing wholesale adoption and mass behavioral change. The challenge for established financial services firms will be to find the correct means of collaborating with new, innovative technologies to achieve this transformation in tandem with new approaches to workflows, processes, metrics and controls.