The COVID-19 pandemic has sent markets into chaos. In fact, 2020 has been the most challenging period in the modern era for financial services and capital markets firms.
But there’s hope. Through better technology, capital markets firms can find a beacon to weather this period of volatility. And the right technology can provide new insights, improve customer loyalty, boost top-line revenues, and reduce costs. Technology’s power to increase returns and loyalty is clear. That’s an advantage all organizations want, especially in times of turmoil.
So, how can capital markets leaders use technology to maintain success amid market uncertainty? Here are five trends I’m seeing.
1. Augmenting Legacy Systems
New applications help enterprises sustain and grow their businesses. So, too, does greater availability of data, both from within and outside the organization. But organizations can’t fully leverage all this data until they reconcile their often-strained legacy technology infrastructure.
The key is to avoid the rip-and-replace method, which carries high risk and demands protracted effort. Instead, new technology infrastructure should complement existing environments.
Banks are analyzing total cost of implementation and time to market, which are critical with a lean workforce and budget pressures. The more complex an implementation, the greater the risks. That could mean costly operational meltdowns. It’s all about keeping the trains running as you improve the rails.
Implementations benefit from technologies that complement existing architectures and infrastructures, ideally with APIs that support portability across many lines of business and operating environments.
2. Leveraging More Data
Data is the lifeblood of every organization. But here’s the challenge: how do you get an accurate and consistent operational view when you have hundreds or thousands of different sources of data across the bank?
These days, smart banks are breaking down data silos and using analytics to build a comprehensive view across the enterprise. The use of more simulations, using more data, improves trading and portfolio management decisions and mitigates risk. Decision-makers get more detailed and more accurate information and predictions faster, and customers win.
Leading banks are making this happen through the use of a high performance distributed data fabric that makes any data from across the enterprise available for reporting and analytics in a harmonized and secure manner.
3. Strengthening Revenues and Customer Loyalty with Artificial Intelligence (AI) and Machine Learning (ML)
Incorporating AI and ML into internal and external services is one of the hottest trends in the industry right now. And for good reason. Savvy organizations are using AI and ML to improve customer experiences and create new revenue-generating services.
AI and ML depend on being able to leverage accurate, integrated, and normalized historical data sets; data scientists typically spend up to 70% of their day just wrestling with data before they can build the models. And of course, developing accurate ML models from the data has typically required teams of highly skilled data scientists.
Fortunately, new technologies and easing both of these bottlenecks. Powerful data platform technologies are making it easier to integrate and manipulate the data for developing machine learning models. And AutoML and IntegratedML engines are enabling SQL and application developers to create accurate machine learning models from historical data sets without requiring data science expertise; and they’re also making skilled data scientists more productive by automating much of the manual work involved.
The benefits of AI and ML extend beyond today’s uncertainty. Long-term success requires organizations to focus on customer loyalty. Today’s customers demand superior, technology-driven interactions, and they reward financial services firms that deliver them.
4. Lowering Total Cost of Ownership
One may assume that banks can access these technology upgrades only at a high price. But the truth is, the right technology implementation ultimately lowers total cost of ownership.
By leveraging modern resource-efficient architectures that require less infrastructure, new technologies avoid the high costs of legacy systems, and the hidden costs of many open source systems. Open source software often requires intensive labor and expertise to achieve the required levels of availability and security, raising the total cost of ownership. Technologies exist today that deliver the capabilities that banks need, with high and consistent performance, reliability, and security.
5. Partnering with Reliable Technology Leaders
Banks increasingly want to partner with companies with proven track records of reliability and customer care. Impressive technology alone won’t satisfy that demand. Technology providers must offer the right tools and unflinching support to ensure each implementation gets the results the customer deserves. Banks have enough to worry about right now, and they should feel secure knowing that their technology partner is with them every step of the way.
Next for Financial Services Technology
No one knows what’s next for capital markets firms, but the organizations that view today’s challenges as opportunities will reap tomorrow’s rewards. Through the use of new technology, data and advanced analytics, combined with innovative strategies, capital markets firms can weather whatever volatility the rest of 2020 might bring and position themselves for the future.