The dawn of 2014 finds Capital Markets at an interesting triangular crossroads. Firstly, explosive stock market growth has resulted in higher volumes as well as increased profitability in key market areas like trading, exchanges, wealth management and brokerage firms while simultaneously increasing the complexity in product lines.
"The cost savings from taking a converged technology approach are phenomenal while adding a great degree of agility, intelligence and business value across the Capital Markets spectrum"
On the second vertex, seismic advances in computing (namely in Big Data, Social, Cloud, Mobility & Analytics) and more importantly their convergence, have begun to increasingly highlight technology as the core strategic differentiator in sorting out the laggards from the winners. In the world of high finance, technological innovation is increasingly the linchpin of a successful organization—whether it is in areas where firms are playing defense—example. Compliance, Risk Management or in areas which have historically been higher margin businesses.
Of the above technology trends, Big Data is undoubtedly the innovation with the most potential as far as critical business segments in Capital Markets go. The language of the business is the currency of Big Data. Cloud on the other hand, is a horizontal capability and will primarily be used for operational efficiency initially but will move up the value chain in terms of business agility and services.
On the third vertex sits an increasingly onerous regime in terms of regulation, risk management mandates and other regulatory oversight. Having said all this, there has never been more opportunity for the CIO in terms of having IT drive business innovation in an increasingly globalized marketplace.
Industry Shifts and Technology Led Opportunities
The biggest industry shifts and opportunities in Capital Markets are occurring in the following broad areas—risk management, compliance, fraud detection, multi channel wealth management and finally the ubiquitous trading platform area. Business automation extends all these areas as a cross cutting capability. With the advent of high performance workflow engines and their maturity, more and more applications are being rewritten across all these areas.
The above areas can be classified into two broad categories from a business value perspective. Areas like Risk Management, Fraud Detection and Compliance are places where one needs to primarily play defense while realizing incremental value. Big Data, Analytics and Cloud Computing helps to gather a variety of data (both structured and unstructured) and then perform in memory or ‘on disk’ analysis of these feeds. The analysis can include plain MapReduce type processing or more sophisticated Data Science techniques. The result of such processing (standalone or combined with existing enterprise data) can be made available to analytical applications. This data can be incorporated as part of a business workflow which can allow LOB (Line Of Business) managers to track how effectively their teams are performing across different product lines. Cloud helps significantly in reducing the hardware/ software acquisition times as well as providing a high amount of hitherto lacking choice. Your applications and environments can now be truly polyglot in nature.
Areas like Multichannel Asset Management & Trading applications are areas where significant business benefits can be realized. Being able to offer multiple ways of banking as well as being able to run reports on demand to analyze upsell opportunities are all areas in which Wealth Managers can definitely grow. The true benefits of acquisition can only be realized by being able to market to a customer as a single entity across massive data silos and external data.
In the Trading arena across both latency sensitive and non latency sensitive applications, there is more and more demand to be able to incorporate social feeds into buy/sell decision– making without negatively impacting latency. We expect streaming real–time analytics projects (example. Impala, Stinger on Apache Hadoop or Apache Spark) to be developed further this year which will only reduce the speed and time to market in this area.
To sum up, 2014 should be a year in which the cost savings from taking a converged technology approach is phenomenal while adding a great degree of agility, intelligence and business value across the Capital Markets spectrum.