COVID-19 pandemic-induced shifts in the capital markets find players placing investment priorities in the cloud and managed services.
FIS recently conducted a research on how capital markets participants are adapting to current challenges amid the COVID-19 pandemic, and how this situation is transforming technology adoption and operations for the future.
250 global executives were surveyed across both the buy-side and sell-side in September 2020. DigiconAsia had the opportunity to discuss some of the key findings with Tara Winters, Head of Global Managed Services, FIS:
Globally, capital markets firms have changed how they plan to compete, following the onset of COVID-19. What are some of the key shifts?
Winters: Like many other industries, capital markets firms have had to embrace a new way of working. Firms have been forced to shift their business strategies to re-prioritize investment in core operations upgrades and resilience measures to ensure they remain competitive in an increasingly challenging environment.
Our latest Readiness research has shown that greater use of managed services and cloud, as well as modernizing client-facing and RegTech systems, are now key priorities for firms focused on making their systems future-proof and their services flexible, but robust.
Overseas expansion plans have receded in importance, falling from the top of the agenda in June to the bottom in September.
In what important ways does investment in the cloud and client-facing systems help in adapting and competing in the “new normal”?
Winters: With the pandemic highlighting the risks of firm-owned technology and infrastructure, this has greatly increased the appetite for cloud-based systems.
Moving to cloud is not just a viable option, it is fast becoming integral for future success, and here are some reasons why:
Cloud is efficient and it enables companies to automatically scale to whatever level of support is needed, e.g. scaling up in volatile, high-volume conditions or to meet extended geographic reach or scaling back as extreme conditions subside.
Cloud also eliminates capital expenditure on infrastructure and hardware depreciation. And if the cloud is coupled with highly secure IT environments, firms can effectively lighten the workload of internal IT – freeing up resources and budget and transitioning technology risks to the managed cloud service provider.
Cloud is resilient. Most cloud services maintain an uptime of 99.9 percent and rapid disaster recovery comes as standard. Additionally, the cloud can be accessed over the Internet rather than depending on physical locations that can become inaccessible.
Cloud gives a greater reach because firms can deliver services in the region required by their clients.
Businesses that work closely with compliance challenges and have restricted security protocols, work well within a private cloud environment as it is designed to meet the data and regulatory requirements of organizations.
Modernizing client-facing systems, such as using BPaaS for client reporting, will also make firms more competitive. Companies have tended to hold onto client reporting as their value-add service. But with new technology and report writing tools, client reporting is evolving into an interactive experience that everyone can offer.
The new differentiator is your digital connectivity, ease of use and customer experience.
The appetite to adopt remote working as a long-term strategy has greatly increased as well and could explain the shifting priority to the cloud. More organizations now expect to allow part-time remote working for the long term. While this would reduce their physical footprints, especially in cities with high rentals and real estate prices, what could be the negative impact in terms of employee and customer experience? What can be done to alleviate the impact?
Winters: The pandemic provided a massive, unplanned experiment in different working arrangements. As executives examine the data learned in this time, it’s apparent that there are many employees who are happier and more productive working from home on a part-time or full-time basis.
While offices aren’t completely going away, financial institutions will give greater flexibility to their teams as a way to improve employee retention and save money in the future.
We believe that long-term strategies that prioritise employees and customers’ wellbeing, by implementing systems that minimize service disruptions and ensure consistent levels of support are crucial.
Overseas expansion plans has receded in importance as the pandemic coursed through the year. How do you think technology could help mitigate the loss in business potential?
Winters: We’re seeing the industry turn to advanced technologies such as artificial intelligence (AI) and machine learning for smarter ways to operate, cut costs, modernize their systems and ultimately optimize their financial outcomes.
The adaptive, predictive power of these technologies is enabling firms to dramatically deliver new kinds of value and reshape operating models. From improving operational efficiencies to delivering smarter investment ideas, AI is becoming a game-changer.
With 78% of business leaders planning to invest in artificial intelligence over the next 12 months, it won’t be surprising to see a range of capital markets services look quite different in the coming years.