13 Sep 2018

Technology and Innovation in Europe’s Capital Markets

AFME and PwC have published a new report on current trends in technology and innovation and their impact on the investment bank of the future.

The report, entitled ‘Technology and Innovation in Europe’s Capital Markets’ examines the key trends which are expected to impact the industry over the next five years, providing a vision for the future and identifying the implications for the industry and for future policymaking.

The report was developed through a survey and interviews with representative banks on AFME’s Technology and Operations Committee and supported by additional research from PwC.

 Key findings include:

  • Technology is one of the most powerful levers banks have to address potential disruption, tackle existing industry challenges and to deliver future opportunities. There are four core technologies - Data & Analytics, Cloud Computing, Artificial Intelligence (AI) and Distributed Ledger Technology (DLT) – which have the potential to transform banks and the industry.
  • Whilst 95% of survey respondents identified the opportunity for cost reduction as the most important driver for the adoption of these technologies, only 28% felt that the current investment allocated to this strategic change was sufficient.
  • A clear data management strategy is an immediate priority as it is the enabler for the four core technologies identified. However, across industry, there are varying levels in the maturity of how data is currently being managed and the approaches to realise its future value.
  • New technologies and a focus on innovation will require banks of the future to be increasingly automated, data-led, open and agile. The investment banking industry is expected to be more interconnected, with banks increasingly partnering with third parties to optimise discrete parts of their existing functions.
  • 90% of survey respondents believed that business and IT roles and expertise will continue to merge, and key skills required by banks in the future will be relationship-based (focused on clients, third-party management and internal collaboration) and technology enabled. Competition for future skills will be high, requiring banks to both invest in re-skilling the existing workforce and driving cultural change to attract new talent.