Points to a Digitalized Ecosystem Driven by Efficiencyand Shifting Regulation
NewYork, December, 28 2016 – GFT, the leadingbusiness, design and technology consultancy working with the top 10 globalinvestment banks and hedge funds, today announced top trends impactingfinancial institutions as they strive to create ongoing value through digitalenablement. These trends show an ongoing shift towards cost efficiency models,regtech innovation and a digitalized ecosystem.
Theindustry continues to be shaped through market uncertainty and the emergence ofmarket opportunities through tech innovation around blockchain, machinelearning and AR. Shifting regtech innovation will also maintain focus as banksstruggle to remain compliant in this new environment as Dodd Frank changesbecome more apparent and MiFID II is delayed. These trends all point to a morevalue-driven, targeted approach towards a digitalized environment that involvescost efficiency models and ongoing regtech innovation.
MarketUncertainty under a Volatile Political Climate
Investors will remain cautious dueto the new administration in the U.S. and equally volatile political climatearound the globe.
Market-based measures of inflationexpectations in the U.S. have spiked since the election. Rising interest ratesacross borders will increase the cost of capital, which will negatively impactmany marginal fintech businesses. With this increased capital cost top of mind,new, riskier fintech start-ups will struggle for funding under a Trumpadministration.
Shifting Cost Efficiency Models
One major theme that has emerged isthat banks are expected to demonstrate accountability and transparency theiroperations. Major big banking players have added data governance teams to drivecost efficiency forward, as the year progresses we will continue to see theseteams grow. With ongoing regulation standards rapidly shifting, banks areexpected to transparently comply to or else deal with expensive complications.Banks have now started expecting these risks and are setting aside funds todeal with these issues – however changing cost efficiency models also providebanks the support they need to drive positive change.
The Emergence of New MarketOpportunity Around Automated Technology
As new technology emerges,developing tech such as blockchain, machinelearning and AR will provide new market opportunities for financialorganizations and fintech players alike. This developing technology will pavethe way for ongoing banking automation as players move to full-scaledigitalized approach:
Digitalized automation process such as machine learning will succeed moreoutdated, legacy systems such as grid-computing and cloud-based platforms.Machine learning has started to fundamentally understand pattern recognition.This is something that banks will seek to translate in support of digitally-enabledautomation processes
Blockchain will be transformed through useful application. Banks and financial intuitions willcontinue to see blockchain running proof of concepts. Inearly October, GFT alongside RBS proved that RBS in conjunction with Googleis able to perform to industry standards for payment transactions usingethereum blockchain. In 2017 the conversation around blockchain will beless backend tech focused and more dedicated to the actual solution and usefulapplication as witnessed with the RBS/Googletransaction.
Ongoing privacy concerns will come to the forefront as data governance and regulatory standardsshift. As machine learning greatly impacts automation patterns, new scenariosaround modelling market risk will emerge. These data privacy concerns will alsocome into play around back testing and validating historical data sets.
Ongoing Regtech Innovation – While compliance and KYC processes have beensimplified and gotten easier to attend to, there is still progress to be made.Without automating the regulatory reporting process, banks run the risk of notproperly processing data governance models – resulting in pricey complications.The US regulatory environment around will dramatically change over the nextfour years due to widespread scale back on key regulatory structure such asDodd Frank and the ongoing MiFID II delay. In response, to best tackle these challengesbanks will witness regulatory innovation aligning with the ongoing trend ofdigitized automation.
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GFTTechnologies SE (GFT) is a business change and technology consultancy trustedby the world’s leading financial services institutions to solve their mostcritical challenges. Specifically defining answers to the current constant ofregulatory change – whilst innovating to meet the demands of the digitalrevolution. GFT brings together advisory, creative and technology capabilitieswith innovation culture and specialist knowledge of the finance sector, totransform the clients’ businesses.
Utilizingthe CODE_ninnovation platform, GFT is able to provide international start-ups,technology pioneers and established companies access to a global network, whichenables them to tap into the disruptive trends in financial services marketsand harness them for their out of the box thinking.
Headquarteredin Germany, GFT achieved consolidated revenue of around EUR 374 million in2015. The company is represented in twelve countries with a global teamspanning more than 4,500 employees. The GFT share is listed on the FrankfurtStock Exchange in the TecDAX (ISIN: DE0005800601).
For more information on GFT visit: http://www.gft.com