According to a recently released IDC spending guide, worldwide
Cognitive Systems and Artificial Intelligence revenues are forecast to
surge past USD 47Billion in 2020. According to another research firm,
Opimas Research, in 2017, financial firms alone will spend more than USD
1.5 billion on artificial intelligence (AI) related technologies and by
2021, USD 2.8 billion, representing an increase of a whopping 75%.
Capital
Markets, like every other space, is seeing a surge in technological
solutions that are coming of age and delivering increased performance-
especially in areas of advanced analytics, real time trade-processing
platforms and improved regulatory compliance. These technological
solutions in a way, have come as a panacea for Capital Market firms,
which are grappling with increasing compliance costs and shrinking
bottom lines.
Thanks to these macroeconomic factors, Capital
Market firms are increasingly looking towards advanced technology
solutions like AI to increase employee efficiency and aid faster
decision making.
As a technology, AI already has established use
cases in areas of client relationship management, trade execution,
reconciliations, transaction reporting, tax operations, and several
other areas.
We see initial implementations like robotic process
automation for reduced manual errors and improving process speeds by
automation of repeatable IT tasks. Even as the Capital Market firms
explore more advanced use cases for AI, a few areas that we are seeing
pilot adoptions include speech recognition, machine learning platforms
and virtual agents.
However, the siloed legacy infrastructure
that most of the capital market institutions have, coupled with lack of a
cohesive, top-driven automation strategy are acting as impediments in
the way of effective AI implementation. In such a scenario, many Capital
Market firms are taking the route of small, targeted phases of
adoption, which can scale in sync with their IT infrastructure.
Another
aspect that we find interesting, is the alternate route that these
organizations are looking to leverage for bringing in AI and other
automation technologies into their ecosystem -- partnerships with
Fintech players. Capital Market firms, much like banks, are partnering
with Fintech players for things like AI driven post-trade processing
platforms and advanced analytics. The most prominent model of these
engagements as of now is via accelerators and labs, and the next phase
can bring in investments and acquisitions.
As Capital Markets
gradually move up the AI value chain, we can expect more Fintech
collaborations, advanced use cases for areas like fraud detection and
prevention and anti-money laundering activities.
Keep watching this space for the latest in banking technology and trends!
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