The Global Financial Markets Association (GFMA) 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 was developed through a survey of representative banks regionally at AFME (Association for Financial Markets in Europe), ASIFMA (Asia Securities Industry and Financial Markets Association) and SIFMA (Securities Industry & Financial Markets Association), to provide a collective view globally of developments impacting capital markets.
It proposes eight principles that banks should adopt into the future to keep pace and balance potential new risks and cybersecurity concerns: maintain a long-term focus; embed data as an enabler; embrace open technologies; adopt a collaborative approach; identify industry priorities; use agile work practices; develop a relationship-based workforce; and enable secure and resilient operations.
Among the key findings from the report are:
- Technology is one of the most powerful levers banks have to address potential disruption, tackle existing industry challenges and deliver future opportunities.
- While an average of 90% of survey respondents (regional breakdown: US 90%, Asia 83%, Europe 95%) identified the opportunity for cost reduction as the most important driver for the adoption of new technologies, only 27% on average (US 27%, Asia 30%, Europe 25%) felt that the current investment allocated by banks to this strategic change was sufficient.
- There are four core technologies – data and analytics, cloud computing, artificial intelligence and distributed ledger technology (DLT) – which have the potential to transform banks and the industry;
- 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 realize its future value;
- Significant implementation of Distributed Ledger Technology (DLT) remains a longer-term priority based on the current complexity of bringing large-scale enterprise and industry solutions to market, as well as integration with legacy systems, and considerations for data privacy and cybersecurity;
- An average of 82% of survey respondents (US 75%, Asia 90%, Europe 80%) believed the impact of new technologies on the workforce will lead to business and IT skills merging and future roles becoming more relationship focused. 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;
- New technologies will shape investment banks to be increasingly automated, data-led, open and agile and connected into a wider pool of technology and service providers;
- Banks, policymakers and regulators must keep pace with new technologies to balance the potential risks and cybersecurity concerns they may introduce. Any future regulatory frameworks should be applied with a proportionate and principles-based approach, but at the same time ensure a level-playing field that creates an open, competitive and sustainable market for technology and innovation.We have identified eight principles that banks should adopt into the future to keep pace with technology and innovation, and balance potential new risks and cybersecurity concerns