Agile and Modular Technology Transformation in Capital Markets
I have been very lucky to survey 17 CIOs, CTOs, and heads of trading or etrading of Tier 1 and Tier 2 global and regional banks recently to try to understand how they tackle their bank's capital markets technology transformation.
No big surprise crystal ball, but a great consensus came out of this work that reinforces our thinking around the theme of agile and modular technology transformation: Revolution is too expensive and difficult to implement in an ever-changing world in terms of both technology and regulation that banks have to keep adapting to. Hence the evolutionary approach is the most favoured these days to respond to the continuous pressure shareholders and board members but also regulators and clients bring onto these listed financial institutions.
Interestingly the buzzword technologies such as artificial intelligence and blockchain are really the cherry on the cake right now — a neat reminder for us analysts to keep our feet on the ground. Don't get me wrong, they are coming our way. Some institutions such as JPMorgan, ING, GS, and Nomura are ahead of the pack and using AI extensively already in their trade value chain. However, for most, there is heavy lifting still to be done to automate processes, reduce ineffiencies, and sometimes just stop using spreadsheets of faxes (I am thinking about the Repo market, for example) before they can start using cognitive technology. Robots and the Cloud are probably top of the list in terms of "modern" technologies that should be used today to transform the banks.