From Financial Technology to Fintech: Trends in Capital Markets

by Brad Bailey, September 28, 2016
Industry Trends
Global

Abstract

Celent has released a new report titled From Financial Technology to Fintech: Trends in Capital Markets. The report was written by Brad Bailey, research director in Celent’s Securities & Investments practice.

The report explores how fintech firms are disrupting the entire capital markets value chain with new business models and innovative technologies for security issuance, trading, and operations.

Fintech disruption in the capital markets has emerged along different paths than other areas of financial services (such as lending and payments) as it looks to remap legacy systems in a time of seismic shifts that are occurring in the relationships among the sell side, buy side, exchanges, and regulators.

Capital market firms, in observing the impact of fintech on banking and retail businesses, have taken a proactive and collaborative approach to engaging alternative fintech business models and disruptive technologies.

Managing and making sense of the exploding stream of data, in all its forms, is the key activity of the capital markets. As business models move from analog to digital, collecting, categorizing, analyzing, and understanding data is the key to leveraging it properly and effectively.

“There are two broad ways of looking at FintechCM. One is technology disruptors; often, this is technology, or a business model that has proven itself in another vertical. The other is firms with point solutions that solve difficult problems with greater automation, effectiveness, or better leveraging of data,” says Bailey.

“The echoes of the great financial crisis are creating challenges faster than market participants can react to them. This is creating major opportunity for FintechCM, with its various components: alternative primary, RegTech, InvestmentTech, Alt-Data, artificial intelligence, and distributed ledger technology to both remap existing business models and partner with market participants to create a more robust market system,” he adds.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

The Emergence of Capital Market Fintech (FintechCM)

3

Capital Market Fintech Taxonomy

5

Capital Market Firms’ Engagement of Fintech

7

 

Data, AI, and Analytics

12

 

Core Market Infrastructure

14

 

Post-Trade Digitalization

19

 

Investment Technology Digitalization

21

 

Alternative Primary Markets

23

Conclusion

25

Leveraging Celent’s Expertise

26

 

Support for Financial Institutions

26

 

Support for Vendors

26

Related Celent Research

27

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