Abstract
The outlook for capital markets firms is characterized by challenges related to volatility, regulation, and operational efficiency. However, firms that strategically invest in technology, particularly in areas like artificial intelligence (AI), automation, and cloud solutions will be better positioned to navigate these challenges, drive innovation, and remain competitive in an increasingly complex and digital market environment. Technology will play a pivotal role in addressing these challenges and enabling firms to remain competitive. As post trade workflows continue to include manual elements, advances around artificial intelligence(AI) are particular of interest.
Global economic uncertainty, geopolitical risks, and fluctuating interest rates will continue to drive volatility in capital markets, impacting trading volumes. Firms will need to manage higher levels of risk and complexity in their post-trade strategies. Advanced analytics, GenAI, and machine learning (ML) will help firms analyze vast amounts of data to make faster and more informed decisions. Predictive models driven by AI will assist in managing risk through the identification of anomalies, errors, and exceptions, particularly in the area of trade settlement and reconciliation.
Regulatory scrutiny is expected to tighten further, with a focus on transparency, data protection, and sustainable investing practices. Firms will need to ensure they meet evolving regulatory standards across jurisdictions. Automation of post-trade processes will be critical to managing the increasing regulatory burden, particularly as trade settlement lifecycles continue to compress. Investment in AI will allow firms to stay compliant through automated transactions and inventory monitoring while DLT and blockchain technology may enhance transparency and traceability in post-trade processes, reducing compliance and financial risks.
The industry will continue to face pressure to reduce costs while improving operational efficiency. Margin compression, coupled with rising costs from compliance and technology investments, will force firms to streamline operations. Post-trade automation and AI will play a major role in reducing operational costs by automating routine tasks, optimizing workflows, and enhancing data management across middle- and back-office functions. Cloud-based solutions will allow for greater scalability and cost savings, while robotic process automation (RPA) will free up resources for more strategic work.
Key post-trade related findings from our 2024 Dimensions survey of buy side and sell side financial institutions globally (N=222) include: