The capital market industry is going through foundational changes, wherein firms are adapting to the digital shift and trying to evolve with the entry of FinTech companies. In the recent past, FinTech companies have been able to dramatically change the market share composition in the retail financial services with their innovative, cost-effective and technology-focused solutions. Since the entry barriers in capital market remain high, the capital market industry can make use of this opportunity to collaborate with the FinTech companies to accelerate their digital shift and develop innovative solutions.
Today, the industry faces multitude of challenges in complex changing regulatory compliances, large applications with large data volumes for reconciliations, frequent high capex for system / application upgrades, etc. As per a recent report by Association for Financial Markets in Europe, regulatory compliance cost of top 13 banks is over USD 37 billion and compliance cost is 40% of the total capital market expense.
We list down some of the areas in Capital Markets where Intelligent Automation (combination of different digital technologies like RPA, AI & cognitive) can bring a significant change and create a lasting beneficial business impact. These areas include:
- Regulatory Compliance: Government requirements for KYC, AML and FACTA regulatory compliances require firms to collect, input and process the client onboarding data. This can be a long drawn cumbersome process prone to errors. Automating the KYC, AML & FACTA end-to-end process with IA can speed up the onboarding, make available useful insights and significantly improve the overall customer experience.
- Customer Relationship Management (CRM): More and more customers are now directly interacting with the digital systems, which give the organization a lot of opportunities through multiple touchpoints to better understand their customers and improve the overall customer experience. They can also be deployed on popular CRM tools such as Salesforce, Oracle, Microsoft Dynamics, etc. Intelligent automation solutions fit perfectly in such high volume, repetitive and rule-based processes and can include processes such as account management, lead management, report generation, data-sync, automated data entry, customer contract management, etc.
- Corporate Actions: Intelligent automation can help in data extraction of corporate action announcements by using multiple automation levers together such as RPA, Artificial Intelligence, Machine Learning, Natural Language Processing, etc. These Can be used to automate a variety of sub-processes like counterparty notifications, dividend distribution, interest payments, eligibility & entitlement calculation, etc.
- Post Trade Operations: It is one of the most crucial and important components of a trade lifecycle. Post execution of trade from the buyer – seller side, these must be matched, verified to ensure no error or data duplication occurs. Post trade operations include various processes in its lifecycle such as confirmation, payments & settlement, asset servicing, reconciliation, order reporting, etc. Leveraging intelligent automation here can streamline the operations significantly and reduce the back-office operational costs.
- Robo Advisors: They are disrupting the online financial advisory services industry. These digital assistants can perform the work of financial advisors in the investing process by collecting information about an investor’s financial goals, risk appetite, investment timeframe to suggest financial plans, portfolio allocation, etc. These chatbots backed by conversational AI utilize big data and machine learning to understand their investor profiles, manage risks and ensure regulatory compliances. These robo advisors can be deployed for different roles such as investment advisory, portfolio analysis, wealth management and risk assessment.
Therefore, as we see, these emerging Intelligent Automation focused trends will act as a force multiplier for the industry’s bright future and inculcate a shift towards more innovation-focused initiatives. Another important aspect is the much-needed collaboration between the capital markets industry and FinTech companies, which will greatly enhance this innovation-led digital shift. Thus, as the industry evolves, intelligent automation technologies will come to form the cornerstone for every phase of the evolution strategy.
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