Technological innovation is transforming the bounds of possibility for organizations around the world. These developments have major implications for capital markets players, both in terms of their own operations and in how alpha is created. While I looked in my previous post at the advances in artificial intelligence and in “extended” reality, we will turn today to two more trends identified in Accenture`s Technology Vision 2018—data veracity and the frictionless business.
Many capital markets firms are familiar with the power of big data and analytics to find insights that lead to alpha. The Tech Vision report confirms the ongoing relevance of this trend, with 82 percent of the global IT and business leaders surveyed reporting that their organizations are increasingly using data to drive critical and automated decision-making.
Yet, the report continues, far fewer firms are investing in the capabilities to verify the truth within the data on which they rely. This has the potential to be a serious oversight. Even the most advanced analytics and forecasting system is only as good as the data it is given to crunch. Left unchecked, the potential harm from incorrect data could rise to the level of an enterprise-level existential threat.
As businesses spend heavily to determine what they can get out of data-driven insights and technologies, they also need to invest in what’s going in. Accenture recommends firms create a “data intelligence” practice to track the provenance of their data and mitigate the risks that threaten data integrity.
Last year’s Technology Vision report identified partnerships and industry-blurring ecosystems as a key trend for the medium-term future. This year’s survey confirms that the drive to collaborate continues to gain momentum: 36 percent of businesses report working with double or more the number of partners they did two years ago.
These growing partnerships face limitations. The legacy business systems and networks on which they are built weren’t designed to support this kind of expansion, and soon such outdated systems will be major hinderances to growth.
The Tech Vision report identifies two key technologies for solving this problem: microservices and block chain. Some financial services firms are already using blockchain to address this issue.
Many, like JP Morgan and BBVA, are involved in Hyperledger, an open-source collaboration creating cross-industry blockchain technologies. The initiative has produced numerous proof-of-concepts and white papers to date that describe a future of seamless communication and frictionless business.
Of course, blockchain’s applications extend well past making collaboration more efficient and profitable. An Accenture analysis of blockchain’s potential impact on investment bank operations found that it could reduce costs by 50 percent for compliance activities as well as business and central operations, and central finance reporting costs by 70 percent.
Realizing the benefits of blockchain, either for collaboration or efficiency, will require the right strategy, alignment and knowledge. The same could be said for the other three tech trends we’ve discussed in this series of articles.
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