“New technologies and innovation will be a significant force in reshaping the industry”, according to James Kemp, a managing director at The Association for Financial Markets in Europe (AFME).
Kemp’s comment was said in response to the results of an AFME and PwC report, entitled ‘Technology and Innovation in Europe’s Capital Markets’.
The report examined 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’s survey indicated that while 95 percent of its survey respondents identified the opportunity for cost reduction as the most important driver for the adoption of technology, only 28 percent felt that the current investment allocated to this strategic change was sufficient.
In the report, AFME and PwC stated: “Technology is one of the most powerful levers banks have to address potential disruption, tackle existing industry challenges and to deliver future opportunities.”
AMFE and PwC said there are four core technologies—data and analytics, cloud computing, artificial intelligence (AI) and distributed ledger technology (DLT)—which they said had “the potential to transform banks and the industry”.
In addition, AFME and PwC said: “A clear data management strategy is an immediate priority as it is the enabler for the four core technologies identified. However, across the industry, there are varying levels in the maturity of how data is currently being managed and the approaches to realise its future value.”
They added: “Significant implementation of 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 cyber security.
Some 90 percent of survey respondents believed the impact of new technologies on the workforce would lead to business and IT skills merging and future roles becoming more relationship focused.
From the results, AFME and PwC said 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.
AFME and PwC added 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”, AFME and PwC concluded.
They said: “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.”
Isabelle Jenkins, partner at PwC, said: “Our report shows that new technologies will drive changes across investment bank functions, their workforce, and industry partnerships.”
She added: “Success will depend on the ability of investment banks to achieve long-term benefits from new technologies by prioritising investment, looking to collaborate where possible, identifying and developing the skills needed, and building a culture for innovation.”
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