Market crashes, pandemics, competition, client demands, and new regulation are paving the way for digital transformations.
Although the coronavirus pandemic has loomed over global capital markets for much of 2020, the digital transformation of the securities industry is expected to continue into 2021 and beyond.
Asset managers embarked on the current technology upgrade path following the 2008 financial crisis. The shock to the system forced them to improve operations just to survive.
In addition, competitive pressures, client demands, and changing regulatory reporting requirements have all contributed to the reasons why so many market participants are investing in new technologies.
Several regulatory initiatives in the U.S. and overseas were implemented in response to the crisis to lessen the risk of another market collapse.
At the same time, asset managers’ clients — like pension funds, insurers, and endowments — have sought more and better information about asset managers’ returns and their ability to beat the market. Client demands have been a particularly important source of motivation to upgrade technology.
“They want more transparency; they’ve wanted more operational information; they want to look more into different things,” says Brad Bailey, a research director with Oliver Wyman’s Celent unit. “We’ve seen a lot of people making these platforms for efficiency. These are major forces.”
Bailey cites State Street…