Capital Markets innovation and the FinTech landscape

Contents
1. Executive summary 4
2. The “why?”: collaboration with FinTechs will be
core to the evolution of capital markets 8
Background and context 9
Innovation in capital markets is no longer optional 9
The way forward: collaboration, not competition 10
Key challenges faced by the capital markets industry 11
Identifying sources of future growth 11
Reducing structural costs 12
Delivering regulatory-driven change
at acceptable cost 13
Rebuilding trust 14
Impacts of global megatrends 15
The global rise of the entrepreneur 15
The evolution of the global marketplace 16
Digital future 17
3. The “what?”: many opportunities for collaboration
have emerged 18
Nine technology-enabled trends that support innovation 20
Cloud technology 22
Process and service externalization 22
Robotic Process Automation (RPA) 24
Advanced Analytics 25
Digital transformation 26
Blockchain 27
Smart contracts 28
Artificial Intelligence (AI) 28
Internet of Things 29
Opportunities by functional or service area 32
Client servicing 33
Trading 38
Business management 40
Data management 41
Post-trade operations 43
Risk management and control 49
Financial control 51
Compliance 53
IT 56
Legal 57
HR 58
4. The “how?”: a practical guide to making
value-generating collaboration happen 59
How should FinTechs approach investment banks? 60
Value proposition: be clear on who you are,
what you intend to be and the problem
that you solve 60
Innovation approach framework 60
Understand the regulations and set a high
bar with regard to conduct 61
Initial engagement: pick the best route in 61
Industry experience is essential for credibility
and navigation 62
Preparedness: start with the end in mind 62
Proving the concept — a major hurdle to overcome 62
Protect your “crown jewels”: intellectual property (IP) 63
Be prepared to build a robust business case 63
Be prepared for procurement 64
How should investment banks position themselves
to engage with FinTech? 65
Set the right “tone from the top” 65
Select the right operating model 66
Innovation operating models 66
Centralized model 67
Decentralized model 67
Hybrid model 67
Don’t expect a risk-free bet 69
Establish a “roots and branches” culture of innovation 69
Consider how to transition to the architecture of the
future 70
Motivate the retained organization 70
For all parties, dialogue with regulators is essential 71
Conclusion: building the investment bank of the future 72
The investment banking ecosystem of the future 73
5. The “who?”: a directory of organizations offering
FinTech innovation services to capital markets 74
World map of organizations offering FinTech innovation
services to capital markets 78
6. Acknowledgements 80
7. Contacts 82