What Does the Future of Capital Markets Look Like?
CIOReview
CIOREVIEW >> Capital Markets >>

What Does the Future of Capital Markets Look Like?

By CIOReview | Friday, May 20, 2022

Successful exchanges in 2025 will have altered their business models to incorporate digital transformation to become closer to their customers.

FREMONT, CA: In 2020, the global capital markets industry experienced a brief reprieve from the relatively stagnant growth it had experienced in the preceding years. Due to market volatility, industry revenues on the sell-side and exchange sector hit near-record levels. In 2020, the buy-side had a healthy increase in assets under management, and many firms in the industry enjoyed robust short-term profitability.

Today's leaders of the capital markets have the chance to transform a short-term rebound triggered by 2020 events into more sustainable firms of the future. How? Investing in game-changing technologies, new talent, and business tactics.

For several years, technology-driven innovation and the development of new digital value chains were the most influential industry disruptors. Now, a worldwide pandemic has expanded the potential for change and enhanced the readiness of financial market executives to adopt new business practices.

However, one crucial question remains: what will the financial services industry look like in 2025? Consequently, what should businesses plan for and invest in?

Sell-side: Investment banking

Investment banking is the practice of investing in people and technology. In 2025, executives in investment banking will not only identify people and technology as essential business assets, but they will also have made investments toward that purpose.

The successful investment bank of 2025 that creates value could be a global giant or a niche specialist.

There is space in the market for both global scale corporations and specialized specialists to produce value. Regardless of size or target market, we believe that all winners will share a combination of improved agility and a strong focus on their chosen strategy. They will require a digitally connected operating model that offers enhanced customer and employee experiences while keeping costs down.

By 2025, people and technological competencies will differentiate genuine contenders from catch-up organizations.

There is space in the market for both global scale corporations and specialized specialists to produce value. People believe that all winners, regardless of size or target market, will share a combination of improved agility and a strong focus on their chosen strategy. They will require a digitally connected operating model that offers increased customer and employee experiences while keeping costs down.

The convergence of business and technology strategies is occurring. How capital markets firms mix and integrate the two factors will significantly impact their success. Wise measures now could include everything from adopting a "cloud-first" business model to recruiting qualified personnel.