Finance and Capital Markets 2020 Predictions
Another new year and a new job! Within Keysight I have now moved on to head up the Finance and Capital Markets solutions team which is responsible for formulating and driving our strategy for growth with the finance sector. Over the recent break I spent some time thinking about key drivers and issues within the sector and as the new year starts, I thought it would be useful to list out some industry predictions for 2020. So looking at areas that are most relevant to Keysight…
- Sometime in 2020 there will be a major cyber breach at a large retail bank. As well as details of customer credentials, some clients will see money transferred out of their accounts. Although the amounts will be small, this will do major reputational harm to the affected bank and damage confidence in the banking system. Politicians and regulators will get involved and "heads will roll.”
- Change control and technical risk within banks’ complex IT systems will continue to be a challenge. A number of outages will continue to occur, with frustrated end customers unable to access their accounts or get money from ATMs.
- Large retail banks across the world will start to realize that their branch networks are not really an historical high cost legacy, but are a way they can differentiate themselves from “lightweight” mobile banking competitors. Look out for the roll out of more “Starbucks” like banking branches that encourage end customers to work and socialize in high street branches with easy access to coffee, snacks, WiFi etc.
- On the Investment Banking side, there will continue to be an erosion of profitability in trading of equities and bonds, but FX trading will increase as macro-economic and political pressures lead to increasing currency volatility. The ongoing pressure on trading profitability will continue downward pressures on costs in those areas, with increased outsourcing and offshoring and ‘deskilling’ of the technology teams in mainstream Investment Banks.
- During 2019 the low latency wars ended in a stalemate. Everyone is collocated at the relevant exchanges and FPGA technology is heavily used within feed handlers and trading engines. The costs of incremental latency improvements are high compared to the gains. However in 2020, expect to see some radical new improvement in wide area networks that reduces the latencies across fiber links between trading venues. The new latency will not be as low as microwave links, but bandwidths and quality will be much better – especially in the cases of poor weather.
- The move of back office trading operations to public cloud based infrastructure has been underway for a while. In 2020, this will accelerate and we will see a major exchange move a large venue to a public cloud environment – either Azure, AWS or Google Cloud.
- As a Brit from Manchester, UK, I have one special forecast. Despite the odds, Man City will come from behind and win the UK Premier League.
If you are in the financial services industry and are interested in seeing how Keysight can help you either avoid or accomplish forecasts 1-6 please get in touch. If you can help Man City with point 7, pleased get in touch with them at the Etihad Stadium! In January 2021, I will do a follow up blog post and reveal how well (or not) I did with my 2020 predictions.