Top Ten Trends in Capital Markets 2017

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Capgemini reports major 2017 trends in the capital markets industry which revolve around the impact of evolving regulations and the ramifications of new emerging technologies like Blockchain & robotic process automation (RPA) on market participants. Evolving regulations since the 2008 financial crisis continue to have major structural and technological impact on the capital markets industry. With regulatory compliance becoming one of the biggest challenges for incumbent capital markets firms, they are collaborating with FinTechs targeting specific parts of regulations.

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Top Ten Trends in Capital Markets 2017

  1. 1. Capital Markets Trends for 2017
  2. 2. 2Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Capital Markets Trends 2017 Capital Markets Trends Driving client experience is becoming a critical element for firms to sustain and grow their business Pricing models for research are being unbundled to comply with transparency requirements Firms are adopting RPA, not only to reduce cost but also as a means of competitive advantage Cloud-based solutions continue to gain more usage in capital markets FinTech startups are increasingly specializing in specific part of regulations and collaborating with incumbents Investment banks are focusing on simplification and redefining their business models Collateral management is witnessing increased focus from market participants Data management and analytics is evolving into a strategic function and becoming a critical element for firms Blockchain technology is expected to change the way data is managed in capital markets Cybersecurity continues to be a focus area for firms as digitization is increasing risk exposure
  3. 3. 3Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Stricter Regulatory Supervision Tighter Liquidity and Capital Requirements Investment banks are focusing on simplification and redefining their business models Encroaching Competition Industry is shifting towards advisory and underwriting functions that provide higher margins Technology investments to gather pace as investment banks initiate agile technology platforms Source: Capgemini Financial Services Analysis, 2016
  4. 4. 4Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Increase in tech-literacy Driving client experience is becoming a critical and essential element for firms to sustain and grow their business Possible erosion of market share of the incumbents The future of products and service is expected to shift to a client-centric one from the current product-centric approach Source: Capgemini Financial Services Analysis, 2016
  5. 5. 5Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Regulatory Compliance towards Transparency Mitigation of Credit / Operational Risks Collateral management is witnessing increased focus from market participants and they are coming up with integrated offerings Resiliency against Market Stress Solutions Focus Centralization Greater Automation Collateral Optimization Source: Capgemini Financial Services Analysis, 2016
  6. 6. 6Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Source: Capgemini Financial Services Analysis, 2016; “New regs weaken research trading link”, Bloomberg Trading Solutions, August 15, 2016 accessed October 2016 at https://www.bloomberg.com/trading- solutions/blog/new-regs-weaken-research-trading-link/ Current regulations require fund managers to create separate transparent research payment accounts Investors are increasingly looking for transparency in pricing of investment products Pricing models for research are being unbundled to comply with accurate and comprehensive transparency requirements €1.7 billion a year Transformation of research function could cost research providers a huge amount of money in commissions in Europe
  7. 7. 7Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Data management and analytics is evolving into a strategic function and becoming an increasingly critical element for capital markets firms Regulatory Pressures Risk Management Changing Business Requirements Cost Rationalization Data Integration and Data Quality Source: Capgemini Financial Services Analysis, 2016
  8. 8. 8Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Cost Reduction Higher Accuracy and Quality Capital market firms are increasingly adopting Robotic Process Automation, not only to reduce cost but also as a means of competitive advantage Reduced Human Error Better Speed Advanced Analytics Regulatory Compliance Source: Capgemini Financial Services Analysis, 2016
  9. 9. 9Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Ledger Consolidation Faster Clearing and Settlement Blockchain technology is expected to change the way data is managed in capital markets Lowering in Systemic Risk Enables firms to work on common datasets, in real-time, and with minimal supporting operations, which will entail a simplified, cost-efficient, transparent, and robust system for all market participants Mid- and Back-Office Efficiency Source: Capgemini Financial Services Analysis, 2016
  10. 10. 10Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Cost savings on IT Infrastructure Client demand for more cost effective, agile, standardized, and secure services Cloud-based solutions continue to gain more usage in capital markets Helps turn IT related capital expense into usage based operational expense Source: Capgemini Financial Services Analysis, 2016
  11. 11. 11Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services Cybersecurity continues to be a focus area for capital market firms as digitization of various parts of the value chain is increasing risk exposure $4.0 million Average cost of data breach incident in 2016 Damage to Brand and Reputation Legal Suits and Investigation Decline in Clients’ Trust and Confidence Loss due to Heavy Penalties Source: Capgemini Financial Services Analysis, 2016; “2016 Ponemon Institute Cost of a Data Breach Study”, larry Ponemon, Security Intelligence, June 15, 2016 accessed October 2016 at https://securityintelligence.com/media/2016-cost-data-breach-study/
  12. 12. 12Copyright © Capgemini 2016. All Rights Reserved Presentation Title | Date | Financial Services FinTech startups are increasingly specializing in specific part of regulations and collaborating with incumbents Risk data aggregation Trading in financial markets Modeling, scenario analysis, and forecasting Source: Capgemini Financial Services Analysis, 2016
  13. 13. The information contained in this presentation is proprietary. © 2015 Capgemini. All rights reserved. www.capgemini.com About Capgemini Now with 180,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.

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