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How Capital Markets Technology is Revolutionizing Financial Institutions

Capital Markets

Financial Services

May 31, 2023

The capital market landscape is constantly evolving and becoming increasingly complex, driven by technological advancements and global economic trends.

The Grand View Research report indicates that the global capital market size is expected to grow at a CAGR of 4.9% from 2021 to 2028.

With such substantial growth predicted in the coming years, the need for innovative capital market technologies has never been greater. Companies that invest in advanced technologies to streamline their operations and improve decision-making capabilities will be better positioned to navigate the challenges of the ever-changing capital market landscape and seize new growth opportunities. 

What is Capital Markets Technology?

The capital markets industry plays a critical role in the world economy, providing the capital needed for governments, companies, and individuals.

Capital markets technology includes various technologies and services to meet the industry’s technical requirements. It aims to offer digital and cloud-based solutions that improve efficiency, streamline processes, and provide outstanding customer service. The primary objective is to ensure compliance with changing regulations while enhancing efficiency and delivering high-quality service to customers.

How is Technology Transforming Capital Markets?

Technology in capital markets has been the key driver of transformation in the industry, with organizations actively adopting new-age and innovative technologies to enhance customer experience. New technologies such as artificial intelligence (AI), machine learning (ML), and blockchain are increasingly finding their way into the industry. These technologies are used for reconciliation, static data updates, instruction updates, settlements, offboarding client analysis, and more.

AI and ML have helped organizations look at historical trends to predict the future, invest better, and avoid pitfalls.

Cloud computing has enabled organizations to reduce operating costs and allowed for highly scalable and available solutions.

Intelligent automation is also being used to reduce manual intervention and operational risks, which is critical in an industry that requires uninterrupted service.

The financial crisis of 2008 was a turning point for the financial services industry. It brought greater regulatory oversight, stricter regulations, and significantly higher fines/penalties. This required the industry to allocate more resources, putting tremendous pressure on shrinking profit margins. Many organizations had legacy systems that were difficult to change and adapt to the ever-changing requirements. Fintech companies capitalized on this by offering superior customer experiences with simplified digital processes, prompting traditional companies to adopt digital transformation.

The COVID-19 pandemic further accelerated the adoption of digital-first approaches in the capital markets industry. The numerous benefits of digitalization include higher cost savings and increased efficiency, allowing for a dynamic value delivery landscape that can adapt to future changes.

Overall, digital transformation has been a game-changer for the capital markets industry. It has enabled organizations to revitalize outdated systems, become more responsive, and achieve higher efficiency. By leveraging in-house IT talent and partnering with proven technology providers, institutions can continue to adopt aggressive change management and emerge as digital leaders in the industry.

Adopting new technologies in capital markets can be challenging. However, with careful planning, preparation, and a willingness to address the potential challenges head-on, organizations can realize significant benefits from implementing  new technologies.

How Hexaware’s Capital Markets Technology Solutions Can Help

In today’s banking and financial services industry, organizations face the challenges of complying with ever-tightening regulations, adapting to digital banking, and delivering an omnichannel customer experience. This has to be achieved amid reducing costs, which include high run-the-bank (RTB) costs due to high full-time equivalent (FTE)-based pricing models.

Industry players must balance operational optimization with digital transformation to succeed in this environment. While technologies such as big data, cloud, mobile, internet of things (IoT), and AI/ML are already transforming how business is done, banks need to further optimize data management by leveraging analytics. The industry can boost enterprise resilience, increase cross-selling opportunities, enhance customer value, and maximize profits by doing so.

At Hexaware Technologies, we have extensive experience partnering with leading global banks and financial institutions, enabling us to offer comprehensive solutions that address the evolving needs of the capital markets. With Hexaware’s expertise in digital transformation and process automation, organizations can accelerate their journey toward digital transformation and achieve their business objectives.

About the Author

Sachin Kombrabail

Sachin Kombrabail

Sachin Kombrabail is part of our Financial Services practice team, specializing in Solutions and Presales. He has over 32 years of experience as a techno-functional consultant having worked in delivering and solutioning financial services applications across the Banking and Financial Services Space.

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