4 Disruptive Technologies Reshaping the Future of Capital Markets
In today’s rapidly changing business dynamics, awareness and understanding of the likely impact of various disruptive technologies is critical to the success of business leaders and financial advisers. Here we try to outline four emerging technologies and their potential implications on the capital markets sector.
One of the most hyped technologies today, Blockchain is estimated to be the platform that is going to store 10% of global GDP by 2027. This emerging technology offers a new approach to data management and sharing and promises a robust solution to address many inefficiencies and redundant processes. It enables market participants to work real-time on shared common datasets.
With increased transparency, the real-time data availability will enable major benefits into the operations side of trade and settlement data reconciliation and will eliminate the possibilities of disputes among all the counterparties. The cash settlement will start occurring in real-time, as the next trade update will be among all the participating entities.
The “Smart Contracts” will be embedded into computer protocol with the login inbuilt to automatically verify and execute the term of contracts. With the help of Blockchain, financial instruments can be defined in smart contracts along with business logic replacing ISINs/ CUSIP as identifier to hold attribute properties in the Blockchain ecosystem. The entire transfer process will reside inside the automated system.
#2 Big Data and Analytics
Today, the need of capital markets is not limited to consuming required data for references and algorithmic calculations, but they also require the ability to analyze data efficiently and swiftly. Underlying data must provide greater insight and control over complex processes for managing cash flow and anticipating risks. It should also automate transactional processes along with real-time analytics. From client servicing to risk and portfolio management, BigData analytics plays an important role to provide new level of customized services and risk exposures.
#3 Artificial Intelligence and Machine Learning
The industry is moving towards conversational commerce by using Chat Bots, AI and NLP at various functional levels. Chat Bots and Natural Language with advance analytics are helping capital markets to lower down the operating cost for some important functions, releasing employees’ bandwidth for critical and higher level tasks. Systems that can learn, adapt, and respond autonomously offer a new area of interest for various capital market technology players.
With the increase in ETFs and social trading and multi-asset brokerage concepts, traditional wealth and asset management companies are concentrating more on developing hybrid AI-based robo-advisors. Hybrid robo-advisors enable one-to-one interaction with human financial advisors and portfolio managers to carry tasks that are more complex. Similarly, AI-based automated bots are also part of AI disruption, with a potential to execute over 75% of all trading activities in microseconds with precision.
#4 Robotic Process Automation
RPA has really picked up as a configurable platform in recent times and holds out a promise as tool of choice for capital markets, too. It can be leveraged in many areas other than its traditional use in enabling workplace virtualization by standardizing volume driven iterative processes and tasks.
RPA not only helps in reducing transaction time, but also offers accuracy improvement and effort reduction in use cases like transaction reporting, reconciliations, and settlements and payments processes. Client onboarding, reconciliation, reporting, and corporate actions are some of the business areas where it would be very effective with or without AI and NLP.
Leveraging aforementioned disruptive technologies, NIIT Technologies Banking and Capital Markets Center of Excellence helps customers achieve underlying business objectives through deep industry experience and a 360-degree view. Riding on the strength of robust partnerships around these technologies and strategic client relations, our experienced inhouse team is dedicated to building innovative capabilities and implementing various proof of concepts for capital market firms.