Celent Capital Markets Research Agenda

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Q4 agenda

Overview

Capital markets firms are faced with an array of strategic choices in 2019 centered upon technology. In the coming year, our capital markets research team will focus on providing a realistic and informed view on the key developments that will affect those strategic decisions. We will help you find a path through all the noise.

One continuing imperative for sell side firms is improving the client experience across multiple dimensions, including relationship management, execution, and data/tools. Faced with rising expectations for efficiency (both human and capital), banks are refining their strategies to keep the client front and center while leveraging the latest and greatest technology.

Investment banks and brokerages aren’t going to be able to do that alone. They will need to harness the power of the ecosystem, including market infrastructures, technology vendors, service providers, and fintechs. They will also need to tend to their own infrastructures by leveraging the power of cloud computing, managed services and utilities to develop more scalable and agile solutions.

The middle and back office, sometimes deserted, is coming back front and center.An acceleration in improving the client experience requires that the front office not drive all decision-making. Front-to-back transformation will provide an edge. Of course, the buy side clients are not sitting still. Having relied heavily on the sell side to deliver solutions, and faced with their own strategic choices, they will increasingly reinvent their own core systems and infrastructure for a digital age, sometimes leveraging their broker-dealers, vendors and service providers, and other times building solutions internally. However, tight budgets and urgency dictate that third party vendors and service providers be leveraged to ensure best practices.

Technology advances are allowing innovation to occur, by breaking some of the trade-offs between cost and performance. Some of the most notable in capital markets are APIs and microservices, cloud, AI / machine learning, robotic process automation, and blockchain.

Celent’s capital markets research will be wide-ranging as we seek to help firms understand the changing technology landscape, prioritize their wide array of strategic choices, and select the partners to help them on the journey. We’ll be exploring a host of topics, organized around our three key themes.

OUR 2019 RESEARCH THEMES

Our capital markets research is focused on technology topics across the sell side, buy side, and market infrastructure. In 2019, we will continue to publish a wide range of research that provides the latest thinking to assist clients along the key themes outlined below:

Digital — Front to Back Digital Transformation of the Sell Side

Investment banks and brokerages are future-proofing their technology and operations to coincide with a digital age. Digital transformation is moving beyond the front office to include the middle and back office. In 2019, we will continue to monitor this transformation, with a focus on middle and back office operations (reconciliation, corporate actions), where we see a rebirth of the middle and back office through next gen tech (AI, DLT) and cloud. Managed services and utilities will also evolve and play a role in this transformation of the sell side.

Data and Analytics — The Sell Side Trading Desk of the Future

2018 saw a sharp increase in cloud deployments and alternative data assets on the sell side to support new business models. For 2019, in the front office, we will continue to monitor the automation of the sell side trading desk, including infrastructure (embracing the cloud), advancements in electronic trading, and methods to speed up application deployment. Understanding, leveraging, and monetizing data assets will be a key part of future strategies.

Legacy Transformation — Revitalization of the Asset Management Core

In 2018, we discussed the challenges to the core technology systems (“the core is cracked”) of the buy side due to changes in regulation and compliance, plus the impact of historical underinvestment. In 2019, we project a year of investment and revitalization of portfolio systems and research management, the nerve centers of the buy side front, middle and back office. We will highlight a model asset manager’s core revitalization through our model asset manager award. Moreover, we expect a powerful convergence of technology in the investment decision support (IDS) and risk functions for asset managers. Asset managers will also embrace a path to the cloud, via new service offerings such as buy side front office as a service for trading, order management, and execution management.

Innovation & Fintech — Market Infrastructures Are Reborn Through NextGen Technology

In 2018, CIOs of market infrastructure firms began revamping their businesses through emerging technology. In 2019, we expect that CIOs will continue to embrace the deployment of emerging technology (AI/ML, robotic process automation, and DLT) to enable the transformation of their organizations. Moreover, firms will evolve their service models and value propositions, targeting new clients (buy side, corporates), as well as alternative revenue streams through new data and technology offerings and ecosystem development.

Digital Assets — An Entirely New Asset Class

Digital assets are rising as a new asset class. As a result, a new pre- and post-trade digital assets environment is emerging. Investment banks and custodians are offering new propositions for trading and custody and may begin replacing legacy architectures with an entirely new and parallel technology stack. Market infrastructures are considering their own propositions, and new investment structures are emerging for the buy side to have greater participation in crypto assets. In addition, beyond private blockchains, there is potential for public blockchains to drive new models for alpha generation.

To access a more detailed outline for our Q4:19 plans, Celent Clients can log into the website and download the full Research Agenda.