What will the capital markets industry look like in 2022? Should we expect the industry to “normalize” and return to look much as it did a decade-or-so ago? That might be the view of some industry observers. But Accenture’s outlook is different. We foresee a period of ongoing change and adaptation through to 2022, driven by three significant industry trends in particular:
#1 A reshaping industry core
The core of the financial market system is being transformed. Previously opaque over-the-counter markets are becoming more transparent, and price discovery has increasingly shifted to platforms (e.g., in FX). We see that this business, which creates more than $250 billion in annual revenue, is being disrupted that way. And we see a continued trend from capital to technology intensity and expect the traditional balance between sell-side, buy-side and market infrastructure to further reshuffle and new business models to emerge.
#2 Game-changing technologies
Like many other industries, advances in cutting-edge technologies are ushering in an era of dramatic change for capital markets. We can already see the influence of artificial intelligence in areas like alpha generation and signal mining, for example. And as the technology evolves, its impact will be that much greater. There are numerous compelling use cases in research, risk analysis, deal-making, data monetization, and client targeting and management, among many others.
Blockchain and distributed ledger technology could end up being even more significant. Although the technology is still young and unproven, there are many potential applications in capital markets (think issuance and asset management, as well as trading and market infrastructure). Indeed, many stock exchanges—Australia, Toronto, Tel Aviv, to name just a few—are already exploring how distributed ledgers could help replace legacy systems.
#3 Ongoing digitalization of the value chain
Two decades on from electronic trading, there are still stubborn pockets of inefficiency to be addressed in the capital markets value chain—both in the front office (i.e. client management and sales) and the back. On the latter, Accenture’s analysis has found there could be as much as $150 billion of costs which digital transformation could reduce—or even eliminate.
Get ready for change
The strategic implications of these trends are profound. Especially when you add the tapering off of quantitative easing into the mix. It means the years ahead are set to be highly disruptive. Every industry player, however successful they are today, needs a fresh and clear view of how their market segment is developing.
To find out more, visit: Capital Markets Vision 2022: Relevance, Value and Growth in the Digital Age