As global macroeconomic conditions pose challenges across capital markets, financial institutions (FIs) are refocusing on return on investment (ROI) when deciding on tech strategy. Placing the right bets to innovate and transform is more important than ever. This requires understanding business cases, workflows, market structure, and regulatory change to successfully leveraging technology.
The capital markets industry continues to be affected by numerous disruptive forces, including higher interest rates, continued regulatory change and geopolitical tensions.
Markets—For the sell side impacts can be felt in downward trends in traditional investment banking activity such as mergers and acquisitions (M&A) and initial public offerings (IPOs) and in the global markets side, a decrease in trading volumes and revenues post pandemic.
Geopolitical— 2024 will see a continuation of a range of uncertainties influencing global markets including tensions around global elections, wars, global unrest, and climate-change driven natural disasters.
Taken collectively, we expect these will continue to weigh heavily on the markets in 2024 and continue to focus attention on regulatory change, systemic risk and cybersecurity. Efficiency and cost containment are in focus, but our research has found that this is not translating to a reduction in tech spending. Whether spending to save, by modernizing or automating, or by looking to build competitive advantage through new products and services, the rapid changes in and convergence of multiple technologies means tech spend in CM is on the rise.
With organic business growth proving challenging, sell side FIs are looking for new sources of revenue growth, whether through identifying new client areas or new products to offer. In most cases technology will be an enabler or catalyst for this growth.
In this report Celent examines how these themes are affecting, and going to affect, sell side businesses in 2024 and beyond. The themes have been identified by the Capital Markets team based on our ongoing research and forward-looking discussions with industry executives. We also highlight the key technologies relevant to each theme.
