What is the future outlook for AI use across capital markets?
This year the market will see more generative AI use-cases go from pilots to production. Throughout 2023, we saw generative AI experimentation across the capital markets ecosystem. Experimenting with gen AI will continue in 2024, but we’ll see an increase of pilots go into production focused on creating differentiated client experiences, automating content curation, and increasing productivity.
Gen AI can improve speed and quality of research, support coding for developers, and ultimately help to accelerate alpha generation by creating, testing, and deploying strategies dependent on high precision knowledge discovery and recall. Firms will need a leader in the space, like Google, that can supply both first party multi-modal AI solutions, like Gemini, and a cloud provider that is open enough to support third party models that meet varying requirements.
How are industry players adapting to AI developments?
Capital markets firms will have to work harder to meet new AI talent demands. There’s a skills gap in the financial market for new roles like AI quality assurance testers, prompt engineers, AI strategy consultants, and AI product managers.
Going forward, capital markets firms will need to look to technology providers to help bridge the gap by providing training to upskill their workforce while introducing solutions that increase productivity and efficiencies across the employee base.
What is the current trajectory for technological enhancements in the digital assets space?
Looking ahead, maturity in digital assets is set to happen on three important fronts. Moving from two-day (T+2) to one-day (T+1) or even same-day (T0) security settlement for financial institutions will demand the modernisation of core and collateral systems. Technologies like blockchain and cloud can help financial institutions speed up settlement cycles, leading to a faster, more efficient financial ecosystem.
Financial enterprises must look to establish digital currency payment rails that will allow faster settlements, lower counterparty risk, and 24/7 availability.
As the regulatory landscape evolves, digital asset and crypto exchanges will make renewed investments in compliant and resilient infrastructure, monitoring, and compliance strongly aligned to existing traditional finance paradigms.
How is the industry adjusting to the increasing prevalence of the cloud?
Capital markets are at a point of inflection in their ability to adopt cloud. The industry has seen deployment of disparate infrastructure that are ideal for point solutions. These types of deployments can solve one of the three requirements – low latency, deterministic, scale – but unless you solve all three, you can’t operate or make an efficient market. The cloud has matured to a point where we will see an intentional set of capabilities that will help meet these requirements.
Hedge funds and asset managers are set to continue to accelerate investments to maximise researcher productivity through the movement of research and simulation infrastructure workloads to the cloud. We’ll see a shift away from proprietary systems towards managed services that improve capabilities, availability, and shift resources to models and algorithms over infrastructure.