Emerging Trends in Capital Markets
In a highly competitive industry with constantly evolving regulations, it has become necessary for companies to digitise their businesses to the maximum extent. The emerging technologies hold potential to disrupt various aspects of the capital markets; hence they must be utilised for ensuring productivity and better finances.
The priorities of the capital market stakeholders have progressed with time, as data analysis and security are now gaining more importance. In the age of digitisation, information is currency, which is why it is time for businesses to rely on technology for streamlined data, better strategies, and decision-making. Some emerging trends are as follows:
Distributed Ledger Technology (DLT) becoming necessary for smooth and secure trade functions
Over the last few years, capital markets have made efforts to integrate technology and automate their trade functions. For eliminating the intermediaries who provide settlement and depository assistance, companies are banking on Distributed Ledger Technology (DLT). With multiple intermediaries overseeing the flow of information, there are chances of reconciliation errors, data duplication, and settlement delays which can have negative effects. Many Fintech start-ups are now using technologies similar to DLT for disrupting capital market services and improving their finances. DLT is considered a logical and efficient tool for allowing secure and seamless data sharing throughout the capital market ecosystem.
Dependence on technology for data management and analysis
Capital markets are bound to generate high quantities of data that need to be processed for gaining valuable insights. Unstructured data analysis is the need of the hour as it is critical in forming trading strategies and financial models. The capital market is also leveraging the capabilities of machine learning for programming back-office procedures and enhancing productivity. There are several companies which offer cutting edge solutions. ExchangeConnect is a platform which analyses the unstructured data and provides streamlined qualitative data. The platform conducts automated analysis, the demand for which is increasing in the buy-side. With the capabilities of artificial intelligence and machine learning, the ecosystem digitises the capital market workflow of the stakeholders.
Cloud technology becoming central to efficiency and decision-making
Cloud is necessary for corporations for tackling cost pressures, macroeconomic reservations, and evolving regulations (for example, MiFID II). This technology helps in implementing innovations without hassles and is the best way to upscale the business at a reasonable cost. Companies have been relying on hybrid clouds, which distribute relevant data between the public and private clouds while keeping sensitive information protected. However, many organisations are now considering public, off-site, on-premise, and a range of hybrid combinations as the volume of data to be handled increases. This trend will get stronger in the future.
SaaS is now considered a solution for business initiatives
The Software as a Service (SaaS) model has been popular in other industries and finally, more and more capital markets participants are now realising its abilities to achieve scalability, high resilience, and availability of information. This technology requires no local infrastructure and saves a considerable amount on maintenance and operations. SaaS products back all the data into the cloud, so the organisations can be assured of a lean network with tight security without complexity. With more SaaS-based solutions growing in the industry, the companies looking after the non-financial demands of the capital market firms will stay ahead of their competitions.
The inference is simple and straight-forward. With the world quickly adopting digital methods, there is a need for an ecosystem which is capable of providing all investor relations services under its umbrella. ExchangeConnect is one such unified platform that combines capital markets and modern technology to provide many utilities to the corporates, buy-side and sell-side.
Are we missing out on any trends? Let us know in the comments below.