Digitalization of Capital Market

Digitalization of Capital Market

Abstract

In today’s world from opening a bank account to transfer money for daily transaction everything is dependent of digital world. Especially in this cashless environment technology is the only key to survive in the market.

However, for Capital Market still lay man is not comfortable with the existing contemporary method for investing in this market. Still people get confused and not comfortable to invest directly in Capital Market as there is no user friendly technology in the market related to basic information about the different investment tools and how to invest on them. Still investors need to consult Financial Advisor for Capital Market advises and investment.

This paper attempts to explain why user friendly technology for Capital Market is needed so that investors can easily get advises and invests directly in one finger click as opening an account or transferring money.

Digital has become a key aspect in today’s world, and most businesses have to transform to meet the need of the hour. Like any other industry, banking industry also trying to transform themselves to get the benefits of digitization.

Retail banking has already seen a lot of digital problems through some innovative and creative offerings from banks and firms.

Banks have always believed that digital interruption will impact mostly retail banking and other divisions, such as commercial banking and investment banking. But now, banks are rethinking this assumption because of some compelling factors, both internal and external.

Submission Body Starts Here

The Capital Market division of banks and financial intermediaries, such as stock exchanges and clearing houses, have started to realize the need for digital technologywhich will be beneficial for their business.

Some digital technology should be in the market so that a lay man would not have to get scared of Capital markets firms are compelled to embark on this journey because of the following internal and external factors:

1. Margin compression:Capital market firms are facing pressure on margins because of the severe competition in terms of pricing and innovative offerings. The top investment banks saw their ROE falling to 6.7 per cent in 2015 from 9.2 per cent the yearbefore. Stringent regulations and associated costs related to compliance are also pressurizing margins. Firms are also facing increasing pressure from shareholders and investors. In the low-interest-rate regime, investors are looking for better advisory on investments in different asset classes in order to maximize their returns.

2. Competition from new entrants:Various firms have come up with niche offerings, which is forcing capital market firms to rethink their strategies. Capital market companies need to compete or collaborate with these firms. Accordingly, they are feeling the need more than ever to improve their overall operational efficiency, including customer servicing, with a focus on automating various processes.

3. Evolving technology:Technologies, machine learning, and robotic advisors, have made significant inroads into capital market firms, which need to come up with a robust strategy to approach and adopt these fast-evolving technologies. Strategies can range from understanding the available advanced data analytics capabilities to the areas in which it can be implemented (preferably, phase-wise approach, starting from low hanging fruits to reap early benefits and win management’s confidence for wider adoption across the firm). As per survey reports, machines can take as much as 30% of the current workload.

4. Changing regulations:Regulations are changing faster than ever. Capital market firms are required to streamline/modify their processes or the way they have been doing business in order to comply with these changing regulations.

5. Digitally connected customer:Digital has become a very important part of a client’s life style. Customers expect firms to adopt/customize their offerings to suit their requirements. In addition, clients demand on-the-go services as well as adigital channel experience from investment banks. Capital market firms need to have an outside-in approach (thinking from the customer’s perspective) rather than an inside-out approach (thinking from the firm’s perspective) while working on product offerings.

Capital market firms need to think innovatively and come up with new business models and new offerings to survive in the current new order. An effective digital strategy is required for these firms to meet the above challenges, thereby creating value for customers. They need to be connected to their clients more than ever through real-time offerings and add value through innovative and customized solutions.

Author Biography

Having 6.5 years of experience in Testing with 1 year of experience in Capital Market worked in different Financial and Banking industry like Insurance, Banking, and Wealth Management.

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