Top Trends Impacting Capital Markets in 2022


Top Trends Impacting Capital Markets in 2022Despite the continuing pandemic, the end of 2021 brought hope with it. Many offices began to reopen, and more people felt that they could socialize more freely with loved ones. And throughout all the ups and downs of COVID-19, capital markets continued to innovate, offer new products, and monetize change.

Last year also saw the introduction of a series of regulations, many of which had received delays during the earlier portion of the pandemic. These regulations on capital markets show no signs of slowing down through this year and 2023. To keep up with the increased focus on risk and environmental impacts, organizations are investing in tech, talent, and technique.

Aite-Novarica Group has focused on ten of the top trends that will impact global capital markets in 2022. Some of these are:

  • Europe’s green taxonomies will reshape global investment decisions. Sustainable investing will require a common language, and it looks like Europe’s advances in this area have put it at the forefront. The EU Taxonomy has seemingly progressed further than other regions in establishing criteria and conditions for what constitutes sustainable economic activity. This will likely become the starting point for other countries and regions as they establish taxonomies of their own, adjusted to match the needs and politics of their local stakeholders.
  • Emphasizing sell-side risk will push investment to the cloud. More and more, modern systems  are cloud-based, but deciding to adopt cloud is a very bank-specific choice to make. About 75-85% of third-party sell-side risk platforms are still deployed on-premises. This type of legacy system is still dominant when it comes to risk management despite an increase in cloud adoption for other areas. Increasing compute-heavy regulations like the FRTB and the arrival of COVID-19 have helped push banks to invest more heavily in their tech stack, which often means investing in cloud.
  • Evolving operating models will accommodate digital and non-digital assets. Aite-Novarica Group has estimated that blockchain and DLT will enable 16 operating models to accommodate the exchange of assets and settlement of payment. These operating models will include four types of assets—traditional assets, tokenized assets, assets native to the blockchain, and FX markets—that will interact with four different methods of payment: traditional cash, central bank digital currency, cryptocurrency, and stable coins. The interoperability of the 16 operating models will result in the emergence of a bridge through which these models interact in the next few years.
  • The use of advanced technologies such as artificial intelligence, machine learning, and robotic process automation will expand to include post-trade functions. Technology like AI, ML, and RPA can help capital markets organizations cut costs, improve error rates, and reduce operational risk. Players in the capital markets space are likely to keep deploying such technologies to keep up with regulatory requirements, processing cost pressures, and industry initiatives such as accelerated settlement.

To learn more about the rest of the ten trends, please read our full report Top 10 Trends in Capital Markets, 2022: Technology Tackles Risk, Regulation, and Innovation. You can also check out our discussion of these trends from our webinar in January.