Digital Transformation in Capital Markets: CIOs Take Up the Challenge

We are always looking for evidence that transformation of global investment banks cotinues and that momentum is accelerating. In the marketplace, we do observe a continuation of transformational initiatives, with an emphasis on radical simplification and digital transformation.

The goal of digital transformation is to simplify IT and operations, reduce cost, better serve clients, and (thus) improve ROE. In addition, the goal of simplification is not only cost reduction but to mitigate operational risk and other non-financial risks.

Digital transformation is driving demand for cloud-based infrastructure, BPO, and IT outsourcing, with banks moving many applications to the cloud where appropriate. We believe that most initiatives to optimize operations for greater efficiency lead to cloud, SaaS, IaaS, and mutualisation/utility opportunities.

In the global markets and related divisions of many banks around the world, we see clear evidence of simplification and transformation. For example:

• JP Morgan is working to shrink number of software applications it uses by 25 percent, with an increasing allocation to new investments and technologies
• Deutsche Bank is working to reduce operating systems from 45 to 4 while also shifting applications to cloud computing
• UBS has long been moving investment banking functions to the digital age through its Neo platform to serve clients better. Moreover, UBS is leveraging Azure to power its risk-management platform.
• Société Generale had been in pilots with Azure and Amazon Web Services. The CIO has set a target of 80% of its Global Banking and Investor Solutions arms in a public or private cloud by 2020.
• Bank of Tokyo Mitsubishi (BTMU) has embraced IaaS and private cloud to improve delivery to customers
• Other firms like Barclay’s, Standard Chartered, RBS, and Credit Suisse are also engaged in these types of digital transformation initiatives

For further views on technology for capital markets and CIO priorities and initiatives, please see these Celent-authored articles for Capital Markets CIO and CIO Review.

• On FX by Brad Bailey
• On A New Archicture for a New Age by David Easthope

For related Celent reports, please see:

• A review of CIO Priorities in Capital Markets Infrastructure: Technology Empowers New Models with an emphasis on Market Infrastructure by Josephine de Chazournes and Arin Ray (or this webinar on the topic)
• A report for Finastra where Josephine identifies the drivers of change at investment banks and digital transformation initiatives

We will continue to report on CIO priorities and initiatives going forward, with a careful eye to separate hype from reality and identify compelling uses cases.