Cloud, AI, blockchain and other types of digitalisation are transforming capital markets significantly.
Global capital markets are increasingly implementing digital solutions to how they operate and maintain their business strategies. Digitalisation has had a considerable impact on shaping current capital markets and will likely continue to do so for the years to come. Reportedly, one of the core drivers of this development is the necessity to tackle industry challenges, such as increased competition, market disruption, compliance challenges and outdated legacy IT systems. More importantly, digitalisation enables continued, sustainable progress and the ability to navigate through these challenges.
Cloud technology, AI, blockchain and the Internet of Things are some of the latest technologies associated with capital markets. Considered one of the most disruptive technologies, cloud computing provides solutions and the ability for businesses to have a reliable, cost-effective and comprehensive perspective of their activities.
A few years ago, a survey by Infosys exploring capital market companies discovered that nearly 70% intend to adopt new cloud services or change their legacy systems with cloud computing. Predicted to grow at a 17.9% compound annual growth rate (CAGR) in 2022, the global cloud computing market reached $1.24 trillion compared to an estimated $545.8 billion.
Blockchain technology and trading platforms have enabled accelerated, more accurate and efficient financial transactions within capital markets, making it easier for investors to trade securities and manage risk. New asset groups, like cryptocurrencies and digital tokens, evolved through blockchain technology and changed the shape of capital markets, providing investors with innovative ways to invest and trade.
Digitalisation has enabled access to capital by allowing the smallest businesses and investors to participate in capital markets. By raising funds, start-ups and smaller organisations can avoid traditional routes and go directly to investors via crowdfunding and other peer-to-peer lending platforms.
With artificial intelligence, efficient decision making and improved regulatory frameworks, compliance can be achieved, as AI solutions enable the determination of vital data and the ability to automate various mandatory processes. In a separate study by Thomson Reuters, 49% of businesses claimed they are exploring regtech solutions to manage compliance, performed correctly, which will enable companies to spend more time and resources on value-added activities.
Furthermore, the Internet of Things has various uses within capital markets, like enhancing security and privacy and creating research and trading strategies. The global IoT market anticipates an increase in the CAGR of 26.4% within seven years, increasing in value from $478 billion in 2022 to $2.47 trillion in 2029, offering multiple advantages for the capital market space.
Thanks to digitalisation, capital markets are transforming in many ways. Aside from the multiple benefits, enhanced automation adoption can assist in leveraging the workforce and machine use and strengthening talent bases.
Ultimately, technology will empower capital market businesses as they adapt to the changing financial landscape and evolving customer needs.
The VadarMoss team continues working with exciting award-winning organisations for their culture, technology and services within the digital transformation space. For more information on how we can help, please visit www.vadarmoss.com.
