Interconnected markets: the imperative for data automation in 2024

Interconnected markets: the imperative for data automation in 2024
Interconnected markets: the imperative for data automation in 2024
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Data automation is a disruptor, poised to fuel innovation, boost efficiency, and significantly improve customer service. According to IDC the market for this technology shows promise, with projections suggesting it could reach a monumental value in the upcoming years. 


Financial services and capital markets simply cannot thrive in the future without effective, accurate, flexible automation. Our world is only growing more complex. Data volumes – particularly unstructured, complex data – are ever-increasing. And regulatory and customer needs continue to evolve.

Today's financial institutions remain highly fragmented organizations that have spent billions of dollars to connect and streamline their operations. 

Yet, they have still not achieved genuinely seamless end-to-end processes. With regulation pushing for speedier settlement times and a market in which interoperability is the end goal, this isn’t good enough.

As 2024 begins, we want to reflect on what’s happening now and what will happen next. How are market drivers evolving and what could future solutions look like? What does the growth of technology and technical expertise mean for our industry? 

It starts with regulation

It’s impossible to talk about what is driving evolution in financial services, including in the context of automation, without talking about regulation. 

For 15 years, regulatory change has been the one constant financial services firms can be certain of – and it’s intrinsically changed how they think about everything from client relationship management, to service provision, to risk. 

The shift to T+1 in the US and Canada in early 2024 is, of course, dominating the market’s attention, driving a huge focus in increased (and better) automation of processes to accelerate settlement times, ideally while also reducing risk.

But T+1 is just the tip of the iceberg: 

  • In Europe, FASTER will transform how firms manage withholding tax relief at source. 
  • New industry frameworks are being developed for the definition and representation of data and processes.
  • The industry is rapidly moving to embrace ISO 20022 for the exchange of electronic data. 
  • Basel IV will have a significant impact on how firms handle risk management across their business operations. 
  • New regulations to guide and safeguard the use of AI are being enacted. 

This is just a snapshot of new regulations. We haven’t even touched on existing regulatory requirements covering everything from customer engagement to data governance and management, to capital allocation and risk management. 

To keep up, firms need to invest on many fronts: technology, processes and culture. Consider how Basel III required firms to change how they managed capital, or GDPR created the data protection officer role. Following 2023 — a year that included multiple bank failures and the rise of generative AI — firms should prepare for regulation to transform how they operate.

Be still my beating (data) heart

The shift to data being the key driver of financial market change is close to my heart.

Data volumes are exploding, we all know that. What’s less understood is how much of this data is unstructured data: forms, PDFs, emails and even faxes (yes, the most sophisticated firms in the world still rely surprisingly heavily on faxes!).

Capital markets firms need to take data in any format and from multiple sources and input it into their processes to meet their operational requirements. Research shows that some processes can be ingesting data from up to 30 upstream sources. 

It’s a herculean task to wrangle this data, clean it, standardize it, validate it and then push it back to where it’s needed. 

Data is a huge opportunity for innovation and productivity improvements, but it’s also a source of operational complexity, cost and risk. (Spoiler: unless you do it right. We can help! Ask me how.) 

It's all about AI...

If regulation and data are driving change, AI is the engine that will power this change. 

Within financial services, the adoption of AI is still, relatively speaking, in its infancy. This isn’t surprising – AI is complex, it’s expensive, and the risks, both financial and reputational, are immeasurable.

On the other hand, the opportunities for AI to disrupt capital markets operations and make genuine, far-reaching improvements to almost all aspects of financial services operations are immense. 

This includes simply embedding AI capabilities in existing data automation processes. AI can significantly enhance validation, analysis and decision-making, remediation, and efficiencies. 

AI is sure to play an important role in the push to achieve genuine market interoperability. IT will also increasingly be a powerhouse for the management of all the complex and unstructured data firms are grappling with, with generative AI likely to establish itself within core business functions such as client service and risk management. 

As with anything new, the regulators are keeping a close eye on AI developments within financial services. The EU’s new AI Act and the US’s AI Bill of Rights are just two examples of how regulators are carefully considering precedents in AI governance as they push for transparent and responsible use of AI.

...but AI remains out of reach for many firms

For financial services firms, particularly banks, this understanding that AI is the future isn’t new. Large budgets have already been allocated to identify and develop transformative technologies and tools based on AI. 

However, real change has not yet been realized. Why? 

In part, it’s not surprising when you consider that no matter how big an organization’s AI budget is, building these tools is extraordinarily expensive and time-consuming. AI also requires highly specialized expertise that many banks, despite the sophistication of their technology teams, may not have. 

This is complicated by the need to navigate existing and new regulations and the fact that AI development is naturally separated from day-to-day business operations.

Nonetheless, firms that don’t successfully incorporate and embrace AI will fall behind as competitors identify and deploy use cases. 

If AI is set to be a disruptor, it will push banks to focus their efforts on new ways to differentiate themselves.

Interconnectedness and interoperability are inevitable

Financial markets are interconnected. They are complex. They are filled with risk. 

From where we're sitting, we see the common denominator: Markets are driven by data, and the better the data, the better everything else works. Automating workflows using this data effectively reduces the cost, effort, and risk of manual processes.

The interconnected nature of these markets necessitates a proactive approach to automation and adaptation. The desire to evolve is present. The next few years are all about turning that aspiration into reality, leveraging the power of collaboration, and harnessing market-wide expertise to stay ahead. We know that automation is fuelling change, driven by regulations and powered by better technology and AI. We can’t wait to be part of this process in 2024 and beyond.