What Technologies Do Capital Market Embrace?

By CIOReview | Friday, August 31, 2018
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According to a recent study conducted by NASDAQ and Celent, technology plays a significant role in promoting growth plans for market infrastructure firms. The report notes that while 10-50 percent of IT budgets of market infrastructure firms are spent on substituting legacy technology, 50-90 percent is spent on the maintenance of existing systems.

The question is, which are the technologies capital markets firms are investing in? As per the report, migration to the cloud is becoming more conventional, and firms are more interested in artificial intelligence (AI), machine learning (ML), and data analytics. However, blockchain is the most publicized technology; though it is still not adopted by many market infrastructure firms.

Cloud adoption being mainstream, the study shows that 40 percent are already employing cloud while about 45 percent are starting to adopt cloud. Data analytics are of keen interest to the capital market, as it is becoming a key revenue driver. Stock market firms look forward to developing advanced data analytics tools with AI and ML to support investment decision support, risk management, and compliance. Leading stock companies are already developing advanced analytics by leveraging AI, ML, and cloud. Data management and governance issues can be challenging for some market infrastructure firms while adopting AI, and therefore, they use AI-enabled solutions from renowned international vendors.

Robotic process automation (RPA) is the most cost-effective technology to automate manual processes. Its adoption is growing at a tremendous rate, and as per the study, over 70 percent of respondents are already using RPA.

Distributed ledger technology promises to be transformative in post-trade market infrastructures. While 70 percent of stock market firms are involved in some pilot project around blockchain, around 20 percent of organizations have no plans to build on or implement the technology. As blockchain is still a new and sophisticated technology, not every market infrastructure firm is able to experiment with it individually.