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Traded Market and Counterparty Credit Risk Tech: Visions and Trajectories 2025

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2 February 2023

Embracing Technology Excellence and Robust Solutioning Strategies

Abstract

The financial industry is at an inflection point, shaped by a confluence of macroeconomic forces, regulatory dynamics, and sociopolitical repercussions in a post-pandemic environment. Stormy conditions aside, future-oriented vectors are accelerating the ongoing transition to the sustainability/ESG agenda, digital assets, and the continued digitisation of markets. This will require firms to face the risks, threats, and opportunities associated with these changes in a more proactive, responsive manner. Industry risk leaders and the office of the chief risk officer (CRO) often stand at the nexus of these changes.

Next-generation risk functions will require different skill sets and organisational collaboration models, as well as more dynamic data and technology enablement strategies compared to the past, reflective of the emerging/new demands placed on the risk organisation to be fit for purpose for the digital age, such as organisational responsiveness, velocity of risk intelligence, business and risk user empowerment, accelerated and controlled adaptation, innovation bent, and future readiness of the risk management technology ecosystem.

Looking forward, ecosystems-led approaches are opening up more avenues for firms to both buy and build on top of platform offerings, enabling firms to benefit from an amalgam of organic and inorganic routes to market—the ‘best of both worlds’. Firms can take full advantage of the vendor ecosystem, and aim for more optimal ‘build versus buy’, ‘standard versus best of breed’ outcomes.



In this report, Celent highlights strategically important factors and presents tactical perspectives for firms looking to achieve fit-for-purpose solution strategies and technology excellence to stay ahead of future tech and data-enabled capability curves. As capital markets firms consider next-generation operational capabilities, we see competitive and regulatory pressures continue to drive the industrialisation agenda around market and counterparty risk data and platforms, with enhanced requirements for infrastructure and platform capabilities to meet emerging standards toward a new financial ecosystem. This dynamic is already upon us, but firms on the whole still need to address maturity gaps in many parts of the information delivery value chain.

We expect next-generation capabilities leveraging a cloud stack with dynamic APIs and microservices ‘glueware’ to increase flexibility in adapting and augmenting specialist requirements, converge toward greater standardisation and consistency (e.g., shared risk measures across the enterprise), and yet still enable firms to pursue different degrees of ‘best of breed’ functionality and customisation through third party offerings.


To learn more about how capital markets institutions and investment firms are upgrading their operations and technologies, please contact Celent for more information on our latest reports on these topics (subscribers can link through to the full reports):