The demand for and adoption of mutualized solutions are likely to grow because need for cost reduction and streamlining operations will persist in capital markets. Mutualizaton can also expedite adoption of new technology, especially in non-differentiating areas of operations.

This report tracks the progress of utility and managed service solutions in capital markets, analyzes the challenges in faster adoption of utilities, and discusses key considerations for next phase of evolution for mutualized solution providers and users.

Capital markets firms need to streamline operations and optimize costs because of rapidly changing market structure, competitive dynamics, and client behavior. Their ability and agility to adopt new technology on top of legacy systems will require rethinking of operating models. Offshoring and outsourcing have been widely pursued for managing costs. In recent years, we are seeing growing interest among firms to go a step further and share costs at a community or industry level through mutualization and multi-tenancy where a group of firms outsource technology and operations to an external agent that reduces costs for individual users.

Firms are looking to significantly reduce costs in non-differentiating areas of operations through mutualization and multi-tenancy, and preferring modular approach to minimize investments and operational complexities, and improve agility. Utilities are the end goal in this pursuit, and managed services offer a more immediate, and incremental option for firms to achieve the end state, especially relating to expansive parts of operations. The demand for and adoption of the mutualized solutions are likely to grow because the need for cost reduction and streamlining operations will persist.