Capital markets: The forces reshaping the industry
- Posted on November 24, 2022
- Estimated reading time 4 minutes
"Life is strange. You keep moving and keep growing. Before you know it, you look back and think, ‘what was that?’"
- Joe Rogan, podcaster, comedian, martial artist
Ok, a Joe Rogan quote isn't the traditional way to start a blog series on the state of the capital markets industry. But it’s a quote that touches on some profound truths related to this rapidly evolving sector. And yes, I confess, I‘m an avid Joe Rogan podcast listener.
Right now, a storm of cultural, social, regulatory and technological waves are rippling through the capital markets sector, causing seismic shifts which are fundamentally disrupting how the industry operates and performs. These waves have always been moving and changing, but the pace is increasing, enabled by technology and accelerated by competition. The results present both exciting opportunities and terrifying risks.
Back to the future
Five years from now, your business will probably look back at the 2022 way of doing things and think (cue the Rogan reference) "what was that—what did we learn, and, importantly, what’s next?”
To paraphrase Heraclitus (I know—Joe Rogan to Heraclitus is a big leap), “Change is the only constant in life”. Accepting that reality is crucial for many traditional and complacent capital markets firms. Many have woken up to it through necessity rather than risk becoming early adopters.
Evolution, after all, is a species’ capacity to change and form beneficial traits which help it outperform competitors and thrive. But not many want to roll the dice and mutate.
Clearly every capital markets firm wants to know what the future will look like. You want to know what to do, how to do it and when to pull the trigger to return alpha.
With that in mind, over this series of blogs, I'll be sharing some ideas about what the future of the industry could look like – and outline some ways that organisation can position themselves to ride the wave of change and avoid being capsized in its wake.
I certainly don't claim to have all the answers, but in my 10+ years in the industry I’ve been fortunate to learn from some truly great thinkers, talented colleagues, and inspiring clients. I hope I can share some of that insight.
Here are the major change agents I’ll be focusing on over the next 6 months:
- Consultancies and technology providers: The way most consultancies and tech providers service capital markets providers is broken. In this blog post, I’ll explain why it’s a problem and why the current model is unfair on capital markets firms that are buying tech services in good faith.
- Society and culture: Society is changing; expectations are changing. Capital markets firms are not insulated from what is happening in broader society. How are you going to change and adapt and who will hold you to account?
- Clients and economics: Expectations have shifted. Clients want consumer-like experiences. What does the future look like, what is on the cutting edge, and how should this impact your tactics and strategies?
- Regulation and global/cross boarder complexities: The market infrastructure, players, and sector are under pressure to adapt its rules to better serve society, or at least not damage it. What is changing, and how can you stay one step ahead?
- Technology: It is not just an enabler to do the same things you used to do differently, it’s bringing about a new way, carving a new path, and tearing down the boundaries we assume are for granted. So how do you make it work for you and your company?
- The art of the possible: In other words, what does the future look like and what could the future look like? What will the financial services technologies of the future look like? We don’t know what changes in consumer behaviour may be on the horizon. Your activities may broaden out and change beyond all recognition.
Along the way, I'll probably drop in and draw parallels with a few hobbies of mine. So, brace yourself for some odes to extreme sports, Brazilian Jujitsu, politics, and history.
I’m always happy to talk about the future and how best to prepare for what’s just around the corner. Drop me a line.