Sapient Global Markets Predictions for 2017
PSD2 impact and re-imaging banks in an API world
European banks and payments companies will spend much of 2017 preparing for the second phase of the EU’s Directive on Payment Services (PSD2). Can banks use APIs to meet these needs and innovate to counter the threat from disruptors?
Robo-advisory: new models emerge. On boarding experience becomes a differentiator?
Many of the well-known ‘robo’ advisors base their service around risk appetite of the investor. But new players to the market are taking an entirely different approach with volatility-based models. Whichever approach they take, the onboarding of clients will be critical, helping support investors to make the right choices.
Reg Reporting: New rules demand new approaches
With a year to go before MiFID II comes into force, the introduction of new reportable products and a number of other developments are increasing the complexity and breadth of trade and transaction reporting. But it isn’t all about the new. Outstanding issues around UTIs and reconciliation will continue to drive:
- Global demand for enhanced, consolidated approaches around 1) instrument identification 2) reconciliation and matching, 3) transmission
- The drive for lower TCO demanding new approaches: removing tactical, regulation-by-regulation models to something more tactical, sustainable and affordable.
Reporting: It’s all about the data
Outstanding issues around UTIs and the overall quality of data submission are likely to come to the fore in 2017. With ESMA already clamping down on UTI generation and updating EMIR rules in the next 12 months, firms will have to invest more effort around quality assurance and reconciliation
Blockchain – are we nearly there yet?
Have we reached the top of the Blockchain hype curve? If you take cultural references as some sort of temperature test, then Dilbert cartoons and Disney’s Dragonchain announcement say ‘yes’. The blockchain allows us to imagine a world where all post trade activity, from issuance to redemption, becomes a series of smart transactions. But how can we move beyond the experimentation to deliver real world solutions?
Beyond CRM: Tapping the Combined Power of Customer and Product Data
Many asset management firms are implementing customer relationship management (CRM) systems to automate their sales and marketing processes and build more comprehensive views of their customers. As a next step, asset managers can devise a strategy to share the information generated by these customer-facing portals and apps with their CRM systems, and vice versa, to proactively engage the customer on an increasingly personalized level.
Transforming the buy-side for a digital future
As global interconnectivity and ubiquitous access to financial markets increase, it is imperative that asset managers articulate their investment approach—and strengthen differentiation. Moving to digital has been slow but the pace of change should accelerate in 2017 as firms are challenged with the increasing competition for assets and mounting cost pressures. How can they approach their technology stack? How and where can they differentiate based on client experience? How can they reduce costs, manage costs and serve clients more efficiently?
The Continually Changing Face of OTC Derivatives: From Hedging to Alpha
After years of regulation, it finally appears that the OTC derivatives market is taking a turn globally towards being re-embraced as an alpha generating vehicle generally as opposed to a collection of specific hedging products. The diluting service position of major global banks, the trading activity rise of asset managers, different global regulations and initiatives from the implementation of MIFID II to SEC SBSR reporting to mandatory European clearing replete with option for direct client access models to current industry issues around OTC identifier initiatives are impacting OTC derivatives.
Data extraction and integration is the second stage of a digitization process.
Project Ion has shown that T+1 or T+0 settlement are effective use cases for DLT.
Jump Trading is undergoing its next evolution with the rise of open protocols and DeFI.
Clients can trade crypto plus stocks, options, futures, bonds, mutual funds and ETFs from a single screen.
Increased electronification has created useable and accessible real-time and historic trade data.