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Darmstadt, Germany, 12/14/2016
Software AG today released its top six predictions for the capital markets industry for 2017.
According to Charlie Platt, Sales Director for Financial Services, UK & Ireland, “2017 will be a springboard for another 10 years of further radical change – more than we have seen in a generation, due to advances in technology coupled with unprecedented political risk in the US and Europe.”
With elections in France, Germany, the Netherlands and possibly Italy, Europe will be braced for more political change. From the perspective of capital markets, this is likely to drive activity around European currency and debt markets. Margins are likely to be higher reflecting the increased volatility over these periods, making efficient collateral management and real-time analytics a big story in 2017.
Focus on Return
Investment banks will continue to break away from asset classes that are not profitable, selling off these parts of the business. Furthermore this will be influenced by the prevailing direction of regulation from Europe and the US.
Rise of the Robo-Bank
Banks will develop their own ‘robo’ capabilities designed to assist employees with advice, in order to better service customers. This will raise the level of complexity, challenging fintech vendors, which are targeting the lower end of the market. The ensuing performance pressure will be a key driver for the development and progression of machine learning and artificial intelligence.
Reinvent Your Business
Brokers and banks will become increasingly technology driven with many spinning off businesses and reinventing their focus, following the lead of ICAP in its sale of the voice business to focus on technology-led trading as NEX Group.
Reality Bites Blockchain
Gartner will be proven right as distributed ledger technology will rapidly go through the “peak of inflated expectations” and head towards the “trough of disillusionment” in 2017. However, this necessary shakeout will result in a couple of strong and real Blockchain deployments by the end of 2017. In addition, banks will retrench and move away from supporting multiple consortia such as R3, as seen with the Goldman Sachs recent withdrawal from it.
More or Less Regulation
The US has been promised simpler, but more linear, regulation with the repeal of Dodd-Frank and reinstatement of Glass-Steagall. If it is delivered (some election-trail promises have been softened), it would favor broker-dealer models over universal bank models, as the ring-fencing proposals in Europe also promise to do. If the G20-agreed mandates of 2009 were undone in the US, a question mark would then hang over global derivatives market structure, as equivalence would need to be revisited.
Platt concludes: “Ongoing uncertainty and mixed messages regarding the Brexit process and the new Trump administration throw several previously held certainties into the air. Continued weak profits and high costs combined with that uncertainty will drive many businesses to more adventurous innovation in 2017.”
About Software AG
The digital transformation is changing enterprise IT landscapes from inflexible application silos to modern software platform-driven IT architectures which deliver the openness, speed and agility needed to enable the digital real-time enterprise.
Software AG offers the first end-to-end Digital Business Platform, based on open standards, with integration, process management, in-memory data, adaptive application development, real-time analytics and enterprise architecture management as core building blocks. The modular platform allows users to develop the next generation of application systems to build their digital future, today.
With over 45 years of customer-centric innovation, Software AG is ranked as a leader in many innovative and digital technology categories. Software AG has more than 4,300 employees, is active in 70 countries and had revenues of €873 million in 2015.
Learn more at www.softwareag.com.
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