Capital Markets innovation and the FinTech landscape

Internet of Things
There are a huge number of applications of these various
branches of AI that are being developed today. Leading
technology corporates are aggressively pursuing AI, setting up
labs and investing large sums in AI startups.
Investment banks are also joining the fray, either developing inhouse
capabilities or partnering with FinTechs to tackle specific
challenges in areas including compliance and fraud, security,
client servicing, investment research, technical support,
trading support and operational resilience.
With AI having such a broad range of applications, and being
further enabled by the computing power and data technologies
now available, our view is that its use in capital markets will
continue to increase.
Benefit trajectory for enabling technology
Level of benefit
Potential game
changers
Enterprise-wide
value
Point solutions
Proof of concept
0–2 years 3–5 years 5 years and beyond
The Internet of Things is a network of physical objects that are
able to exchange data over the internet. While machine-tomachine
exchange of information is nothing new, the Internet of
Things places greater emphasis on sensors to monitor and detect
physical events, and on the communication of data about these
events to support either automated or human decision-making.
The potential for the Internet of Things to transform the real
economy is considerable. For example, smart metering — whereby
sensors within domestic and business premises record and report
energy usage and environmental data — is already mainstream.
Other notable uses include media and advertising, where
messaging can be contextualized based on a consumer’s
location, as well as applications in environmental monitoring,
manufacturing, transportation and supply chain manufacturing.
Given such wide potential uses, Gartner is predicting over 20
billion devices by 2020 14 .
But how is the Internet of Things relevant to the capital markets
industry? The answer is: in many ways. Take the need of a large
corporate firm to hedge coffee prices. The reason for the hedge
is price uncertainty at a future date. Plenty of data is available
historically about supply and demand. But how much more
effective might the hedge be if the risk manager was in receipt of
real-time data both from meteorological stations across the world
and probes embedded in the soil on a South American hillside?
14
www.gartner.com/newsroom/id/3165317.
There are many other potential uses. Physical commodities traders
constantly seek to optimize logistics. Knowing the exact location
of a vessel, obtaining the exact weight and quality measurement
straight from assayers, or being able to track containers accurately
as they come into and out of warehouses can help to limit risks and
enable better decision-making and forward planning.
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