Delivering transformation for Capital Markets firms
Capital Markets have endured a tough decade of falling revenues and weak profitability. The sector was largely characterized by shrinking core revenues, high cost-income ratios and wide disparities in economic results. The unprecedented events of 2020 drove significant increases in volatility, risk management demands and trading volumes which all generated significant incremental revenue.
- Sell-side firms (e.g., investment banks) will accelerate their strategic transformation programs and reshape the cost base to drive consistently higher profitability.
- Buy-side firms (e.g., fund managers) are expected to increasingly become digitally native, infusing technology across their operating models, including investment process and client engagement.
Although technology-intensive, Capital Markets still require high-cost human interventions due to regulatory complexity, legacy technology, data challenges and excessively manual processes. Know your client (KYC) and anti-money laundering (AML) requirements have driven up the costs of onboarding and maintaining the client base. Siloed functions continue to generate duplicated and even circular processes. Ongoing regulatory changes mean front office staff are still focussing too much time on non-revenue generating tasks.
The capital markets’ buy-side business is profitable and an integral part of the financial services industry, generating 90% of economic profit in 2020, according to Accenture. But Fintech players are driving steady transformation in areas such as accessibility and advice, where fintech players have the clients, power, engagement model and digital offers to be a long-term threat to the incumbents. There are other challenges. Adopting digitally-native engagement and interactions all the way from distribution to client experience is essential. Rightsizing the business to drive efficiencies and lower cost, including automation and process improvement. Becoming first mover and market maker by empowering the workforce to be flexible and receptive to change, including becoming an employer of choice through innovative use of technology.
Asset managers need to transform their operating models by leveraging AI, data and analytics to realize cost savings and drive operational agility with cultural change. AI is evolving, and asset managers need to invest in these technologies to enable fast, data-driven decision-making around returns, product suitability and new offerings. Firms that do so will gain greater speed in how they go to market, make decisions and sell products, while also providing new ways of engaging with clients. They’re data-driven at the core: from decision making to empowering employees, those who act early across products, technology and client and employee demands are likely to secure a competitive edge.
Wealth management is a large and rapidly growing market. Global diversification is resulting in increasingly technology- and market-savvy customer segments. Creating a flexible, end-to-end digital model that delivers a simplified, more cost-effective operating model and a better client experience is critical to growth. Clients are demanding more from their wealth providers: more personalized insights and a better understanding of their own needs. More wealth management firms are deploying strategies for specific customer segments, including the emerging wealth and mass affluent categories. They also want investments that reflect their values, such as ESG. Combining the right mix of automation and talent will lead to more efficient delivery of services at scale to clients with lower levels of wealth—a customer segment that has historically been underserved.
“It’s great to have the opportunity to solve the unique technical challenges for the industry and help our capital markets clients while working with a varied ecosystem of technologies to do so.”
Forecasting the future of capital marketsWe’re problem solvers and strategists. Our industry-leading teams create tailored capital market technology solutions, from developing highly secure real-time trading systems to providing data and critical insights into their businesses. Avanade solutions address your business’ critical areas, including client experience, regulatory compliance, risk management, market data, and trading across all asset classes.
Capital markets technology that deliver tangible results for your business
We’re helping the world’s biggest investment banks drive transformation through people, design, insights and cloud technology. From trade execution to risk management and regulatory compliance, our business solutions help clients in a variety of sub-sectors and across all asset classes. Using advanced technologies – both open source and the Microsoft platform – our clients experience positive results from our innovative solutions.
UX Design, digital strategy
Custom trading applications and tooling
Digital UX, data consolidation and analytics
RPA, predictive analytics, algorithms, and distribution
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We grew up on Wall Street
Over 20 years of experience building technology products and platforms for the capital markets industry.
Servicing all of the top-tier global capital markets firms globally with offices in major financial hubs, including New York and London.
Over 200 consultants around the globe, combining industry knowledge with strategy, design and technical skillsets.
Custom application development and user experience design for capital markets.