In my last post, I shared five design principles that will be critical for creating a competitive advantage in capital markets organizations over the next five years. Specifically, capital markets firms will need to embrace operating models and technology that’s intelligent and automated, data-led and client-centric, open and accessible, agile and resilient, and simple and homogeneous. Today, we’re taking a closer look at how firms could begin moving in that direction.

Always in motion

In 2022, capital markets firms will be dealing with constant change—both in the world around them and in their own operations. In the past, firms have typically operated on a three-to-five-year planning cycle with a static end state. Today, we’re increasingly seeing developments and disruptions appear and scale well within that timeframe, making the end state a continually moving target.

Going forward, the watchword will be agility. With current organizational structures, significant changes in capital allocation and resource requirements can hold up progress and cause internal instability.

To compete effectively, capital markets firms should be prepared to change direction and course-correct quickly.

Always innovating

Flexibility and nimbleness would need to be built right into the DNA of every capital markets firm, with business and technical architectures that can deploy, adapt and scale new models virtually on demand. Central to this agility will be an efficient innovation process with effective investment, governance and execution. Firms must be able to not only unlock free cash flow from core businesses, but also evaluate opportunities as they arise, and adopt new execution tools and techniques to ensure they’re getting the biggest bang for every buck.

Four steps to get started

By taking steps in four key areas, you could not only begin to align your organization with the five technology design principles we discussed last time, but also reset your cost base and start strengthening your innovation muscle.

1. Explore digitally enabled ecosystems that provide component service across technology, processes, skills and data. Industry utilities that offer services such as post-trade processing can deliver significant savings across the enterprise in steady state.

2. Take advantage of virtual workforces to improve scalability and agility when it comes to certain customer-facing and operational tasks. Our experience in deploying intelligent automation technologies across capital markets organizations suggests that most firms can reduce FTE costs significantly from back-office and corporate processes alone.

3. Use client-centric analytics to glean customer insights and improve your responsiveness. In addition to smarter customer segmentation and cross-selling, a better understanding of your customer profile can help streamline and rationalize client support operations.

4. Leverage distributed ledgers to optimize post-trade settlement, re-architect processes and release trapped capital. Significant parts of the trade process—including reconciliation, confirmation and trade-break analysis—could be reduced or eliminated completely.

For more on these four steps and the benefits you can expect, check out: Capital Markets Technology 2022: Five Technology Design Principles for Digital Capital Markets.

If you would like to discuss this topic further or get additional information, please email