Capital Markets 2021 highlights
?“If you continue shrinking costs, eventually, you arrive at a point where quality suffers. When you can’t squeeze costs any tighter, there’s only one thing to do. Rethink how you operate. Completely”
The reality in Capital Markets today is that firms need to focus on their competitive advantage and what differentiates them in the eyes of their clients. Non-differentiating activities should be simplified, streamlined and outsourced.
Here’s another way of balancing the cost/quality equation. Industry service providers are leveraging cloud-native capabilities and rapidly introducing as-a-Service (aaS) business solutions, offering compelling functionality at an increasingly competitive price. Unlike other industries however, the risk appetite for groundbreaking solutions in the highly regulated Capital Markets sector, is hindering adoption.
2. Too big to fail, or too slow to succeed?
“Firms that decided to cut their way out of the recent crisis instead of modernizing and adopting new digital technologies, are left with complex technology stacks which are becoming formidable obstacles to agility, flexibility and time-to-market. Attempting to add new functionality gives rise to escalating costs, borne of the need to install new processes and systems on top of older systems that are no longer fit for purpose.”
To maintain an edge in today’s markets, even the largest banks and Capital Markets firms must streamline their operations and deliver more value at speed. No longer able to rely on the regulatory life preserver that supported their market position until recently, they need to offload non-differentiating activities, making the most of the as-a-Service ecosystem or utility model.
3. Systems consolidation
“A target operating model is not just an architectural map for replacing 10 systems with one or two sleek new systems. It's about business, IT and people benefits. It's about governance and the end-to-end business process. It’s about meeting banking objectives for cost saving and reducing time-to-market, in line with the overarching strategy.”
Streamlining and consolidation allows banks to take more control of fewer applications. Rather than attempting to resolve an issue for a tangle of complex legacy systems, imagine how much simpler life would be with just a couple of sleek, modern systems to worry about. Banks could focus more on business and being better equipped to face market challenges and regulatory changes at scale and pace.
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4. Change can be difficult, but it doesn’t have to be
“Ask yourself, ‘Do your clients notice when the work gets done right or only when it goes wrong?’. If the answer is the latter, then that work and those business processes could, and should, be done by a service provider, as-a-Service. That would allow your firm to focus, wholeheartedly, on what it does best.”
Imagine a world where as-a-Service delivery is the norm for most of what your firm does. How much agility would this inject into your client-facing business? How much more bandwidth would you be able to devote to what best serves your clients, and makes both you and them money? And, ultimately, how much more efficient would your operations be?
This is the second in a four-part series of Changeability blogs by Matthew Hargreaves. Catch up on the other three here:
5. The future of investment banking is in the cloud
“The pace of IT change is remarkable and the key driver is democratization. Internet technology opened new markets and ways of engaging. Cloud technology is the next big shift. It’s opening up a whole new ecosystem of platform services and allowing banks to operate on a leaner estate. It will also lead to further disruption.”
All new technological development is cloud-native or cloud first. And as more and more banks move their technology estates to the cloud, we can expect to see an entirely new ecosystem of as-a-Service solutions being adopted. This will force organizations to focus on business and user requirements rather than application centricity, leading to improvements in the end-user experience. Firms that don’t make the shift risk being left behind, uncompetitive and irrelevant.
6. Make Luxoft your 2022 partner for strategic transformation
With extensive global experience across the whole Capital Markets value chain, Luxoft is uniquely placed to deliver your technological ambitions for strategic change in the year ahead. Get in touch with our experts and find out how we can help streamline and grow your organization.
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