|Peter A. Horowitz is a senior vice president at BearingPoint and leader of the firm's global markets team. He has more than 20 years of experience in the capital markets, asset management and brokerage industries. Horowitz has led client initiatives that include a cost-reduction effort directed at broker fees and the development of an enterprisewide wealth management platform.|
Capital markets firms enter 2007 amidst dramatic changes in their product offerings, customer relationships, organizational structures and markets. Commoditization of traditional investment products and the simultaneous creation of more-tailored instruments will expand this year, as will the disintermediation of investment banking and securities trading. Worldwide, exchanges will continue to redefine their roles, while Brazil, Russia, India and China (BRIC), as well as other emerging markets, will represent an important, expanding growth engine for the global capital markets industry.
What do these trends mean for IT operations in capital markets firms? Clearly, having a technology road map that allows for significant transformation is crucial, as technology is expected only to grow as a competitive differentiator. A global survey conducted for BearingPoint in 2006 by Datamonitor revealed several overarching imperatives for firms seeking to take the offensive in the emerging capital markets industry.
Enterprise Client Management
The trend toward reconfiguring middle- and back-office IT functions into massive processing utilities is shifting the internal focus for capital markets toward the front end. The struggle for management firms to retain their best clients against a new crop of competitors will require them to maintain much deeper relationships through enterprise client management.
With client relationships perhaps the most important component of success in this realigned market, ongoing refreshment of client interfaces already is at the top of the technology agenda. More so than other financial services providers, capital markets firms believe these applications provide true competitive differentiation. Because of the difficulty in building a ubiquitous platform across multiple product lines, most firms will continue to build their own well into the future.
The front-end technology focus also will be a key ingredient in the establishment of the next generation of advisers, which will need to marry industry-leading technology with a shift toward asset allocation and management services.
Architecture: Business Process Building Blocks
The relationship between the business and IT will remain dynamic, fluctuating between greater and lesser degrees of centralization, depending on business conditions, regulatory requirements and internal IT budgeting processes. Regardless of the specific roles of business or IT managers, some overlap between the two areas is almost certain to continue.