After a volatile 2020 and an unusually busy 2021, financial institutions are coming to terms with the ‘new normal’. Large-scale digital transformation programs are back on the cards as is the need to acquire new human talent. In turn, software vendors are looking to improve the usability of their products and become seamlessly embedded within their clients’ workflows. No longer is desktop domination the goal – but rather collaboration and co-existence. This then sets the scene for a more considered approach during 2022 and one in which financial services technology providers have a critical role to play.
We now look through the eyes of various financial services experts to get their view of the top trends for next year.
In the last two years, we have seen a real push to automate workflows – delivering data, process and collaboration where users need it rather than through traditional desktop applications. This has led to an increased need for platforms to be more efficiently connected, the ability to share context, information or pass the workflow to other internal or external teams.
Two other trends observed have been: firstly, a growth in the number of specialised fintech firms that contribute to a single component of a workflow, allowing clients to ‘cherry-pick’ the best of breed for any given workflow, and second, an increased appetite from the mega-techs to step into financial services.
In many ways, Symphony works as the connective tissue joining all of the new (and old) platforms together in order to tackle inefficiencies. We also seek to contribute to the wider industry and its evolution through our active role in organisations such as FINOS, to help drive the connectivity standards that we feel will help our clients and partners to best achieve these goals.
Organisations increasingly look to minimise their operational footprints through outsourcing non-core activity. Infrastructure is moving at pace to hyperscalers, as well as reducing their footprint and cost; this also better positions organisations to respond to carbon commitments and enables ever more agility.
Platform services can be based on open-source, or hyperscaler, stacks with an integrated patchwork of solutions built on SaaS, vendor and bespoke services. Cloud technology (IPaaS and especially RESTful APIs) loosely binds the enterprise solutions and makes all layers accessible. The democratisation of technology services enables the entire organisation to contribute to their estate (within a citizen developer model under the governance of IT).
The patchwork of services, moves us towards micro architectures and this means business users must have a desktop interop solution, not just as a tool to help support flux, but to bind micro frontends and be part of an overall strategy to empower the user to design their own experience.
2022 will be dominated by a continued shift towards data-driven advisory, driven by three specific trends in capital markets innovation. Firstly, demand for AI-driven analytics to be deeply integrated into workflow to address use cases such as understanding client intent, smart-servicing clients and better managing talent will be a key driver for the adoption of ML/AI. How analytics are incorporated into the user journey and experience will be a key consideration.
Secondly, market dynamics including fund-flow from public to private markets, increased productivity and efficiency demands and a more cost-conscious and fragmented buyside will drive demand for better integration of client insights across the desktop to support complex cross-functional workflows and automation of common, repeatable tasks – freeing up professionals to focus on higher-value activities.
Finally, the rise of new forms of research to address ESG and alt-data needs will create new competitive threats and opportunities for providers. Firms will need to think carefully about how they produce, deliver and integrate content into downstream workflows to maximise ROI. Digital transformation will further yield deeper customer behaviour insights that can create a virtuous cycle to better understand needs and improve service levels.
2021 was a year where we saw trading firms’ attitudes shift from looking at remote working as a temporary situation to looking at remote working as the new normal. Mobile capabilities have become a top priority for many of these firms and this has introduced new security and support challenges. People want to work securely from their personal tablets or phones as well as their desktop, and they want access to their systems outside of normal business hours, as close to 24×7 as possible. This is because flexible working conditions have meant that many people are working outside of the normal 9 to 5 business window. We have seen portfolio managers and traders using their mobile applications late at night as well as during the day.
As remote work has become the new normal businesses have realized that their software and their human resources need to be tightly aligned to promote the efficient digitization of the enterprise. Inefficient workflows and duplication of data need to be eliminated to promote efficiency. As a result, many firms are looking to move to cloud-hosted SaaS platform environments, since they have experienced the pain of trying to maintain multiple fragmented systems in a remote work environment. For these firms, increasing efficiency means eliminating the “glue-ware” that has piled up over the years as they knitted different vendor solutions together.
The lessons from the pandemic in terms of platform consolidation, the optimisation of desktop real estate and a preference for SaaS deployment are now a given and the prospect for hybrid working patterns show that they are set to stay. In the world of the front office, we expect an insistence on greater system interoperability and availability and consistency of data and analytics throughout the trading life cycle both to support the trader’s execution choices and also to assure a more informed dialogue with the portfolio manager. In parallel, and across the buy side spectrum, we anticipate further consolidation of disparate single asset class/single dealer trading platforms to drive operational efficiencies and to meet the liquidity aggregation, counterparty and venue needs of the more and more prevalent multi-asset class execution desks.
The extreme volatility experienced last year also increased the requirement for real-time (or at least intra-day) risk up from just a nice-to-have to a must-have. Having key risk analytics not just as a passive daily static report, but being visible and current alongside the active portfolio and trading view, gives a greater level of comfort and control that you are not only operating within pre-and post-trade limits, but also able to react quickly to adverse market moves.
The Financial Sector is data-driven, with a growing focus on the use of historical data to inform real-time trading decisions. BMLL believes this will continue as the industry becomes more competitive and the need to find ‘alpha’ across the entire investment process gains importance. It’s insufficient for participants to continue to ingest large quantities of poor-quality data, delivering only limited insight. Only high-quality, market microstructure data enables participants to gain actionable insights for execution alpha and performance.
The increasing demand for high-quality granular data means the industry is seeing a rise in specialist, scalable, cloud-based data science solutions to process vast quantities of data and provide actionable analytics. Legacy systems will struggle to meet client needs. Customers will seek scalable platforms that allow centralisation of data collection and high-quality content storage for use across a wide range of internal solutions, providing a higher level of flexibility and functionality.
For 2022, and for the foreseeable future, we are all very mindful of reducing our Carbon Footprint and repurposing what we have. This includes our earlier investments in financial services technology and in particular applications and IT infrastructure. For the technology buyers and suppliers, this is indeed a challenge as it appears at odds with our desire to remain current and relevant. The opportunity is therefore to learn how to fold in new cutting-edge functionality and contribute to the CF reduction. The thought-leaders in this space are looking to technology companies to support new application architectures in which old and new systems can be blended together. It’s an interesting additional dynamic for IT teams who wish to support the climate-change agenda.
As the world continues its trend towards virtualized events, the investment industry is experiencing new pain points, mostly around the tracking, accessibility, consumption, and understanding of these additional issuer communications. Specifically, while Work From Home has mitigated the travel and lost time between meetings, allowing more meeting events to be attended in a single day, it has obviously not alleviated the physical limitation of attending more than one meeting at a time, whether that’s simultaneous corporate access invitations or multiple earnings calls.
We are excited that Aiera covers over 40,000 investor events annually across over 10,000 equities with a single click, either in real-time or after the fact. Aiera is able to connect to these events through a proprietary workflow, where audio is captured, live transcribed, and analyzed. This is for public events and private events, too. Private events allow allowed users to take advantage of our advanced connection workflow, so that firms and individuals do not lose valuable IP given the limitations of space and time, allowing users to “attend” and capture important meeting content, even when physical attendance is not possible.
As we lookout, the influx in meetings and events, and the need to manage these public events and private invitations efficiently, is not going away anytime soon. This is why we are so excited to work with Glue42 and to offer its customers the opportunity to interoperate our monitoring and access capabilities with other experiences.
The industry is emerging from a regulatory-dominated agenda, refocusing to address accumulated technical debt across their businesses. In parallel, progress in key and emerging technologies is helping firms create sustainable efficiencies, reinvigorating their ability to innovate. Rapid Addition thinks the following 4 areas will see accelerated adoption in 2022:
1. Organisations will shift to a composable enterprise, leveraging interoperable, open-API technology to assemble best-of-breed solutions
2. Cloud is allowing firms to unlock value in data and reduce the complexity and cost of trading connectivity. Recent traction will continue to accelerate
3. Quant funds have led the way in AI and machine learning, but adoption is expanding across the industry as firms leverage increasingly accessible data to generate an advantage
4. Beyond crypto, broader asset digitisation is emerging as a clear trend, with tokenisation enabling the creation of fractional ownership and trading opportunities for previously illiquid assets
The main trends that experts outline for next year’s financial services technology development revolve around more sustainable and client-centric innovations. At Glue42, we develop our desktop integration platform based on business demands. The result is a powerful long-term solution that blends with existing technology to make it more efficient and add extra features, instead of monopolizing the client desktop. Hence we are happy to collaborate with fellow software vendors as part of this new wave. We will continue to explore how these trends progress and contribute to tech innovation in the industry.
In summary, the top 5 most discussed 2022 themes by our featured industry experts are:
- Reduction of operational footprint
- Development of more scalable platforms and solutions
- Access to real-time data and analytics
- Investment in AI, machine learning and interoperability
- Modernization of legacy systems
From the entire team at Glue42, we thank the contributors to this article and wish everyone great success during 2022.
