Technology outlook for financial markets in 2018

2018 is around the corner, offering an opportunity to reflect on the previous year and look at the trends that are likely to shape the financial services sector in the coming year. Just like last year, in this article I offer five technology predictions for financial markets in 2018.

1)      Cloud adoption. Cloud has been a prominent talking point this year, with a large number of tier one financial institutions increasingly realising its use for high scale applications. In 2018, we expect to see an increasing use of hybrid cloud environments whereby financial services firms will leverage networking, security and managed cloud services to enable them to consume and simultaneously utilise multiple clouds environments at scale and across different geographies.

2)      Evolution of distributed technology models. Distributed computing whereby processing and data is spread across multiple systems and different locations has become more commonplace over the past year. In the next 12 months, it will be interesting to see how the distributed model is affected by the emergence of new technology solutions with strong distributed computing capabilities, specifically the Internet of Things (IoT) and blockchain. The growing uptake of these technologies may expose a new computing model. Moving forward, we can also expect the debate around managing the technologies that underpin the distributed technology model to move higher up the regulatory agenda. The immutability of data in these new technologies will likely play an important part in these discussions.

3)      Regulation, regulation, regulation. Perhaps the biggest challenges of 2018 will be regulatory compliance and the subsequent need to manage market structure change. The year starts with MiFID II, but it will not be long until GDPR moves to the top of the compliance manager’s to-do list. Additionally, the UK’s departure from the EU will be yet another regulatory puzzle that will need to be addressed – to say nothing of possible Dodd-Frank changes in the US! Regulation is a driver of change – it presents opportunities, as well as challenges. It will instigate a review of core business strategies, supporting systems, processes and procedures, offering an opportunity for financial firms to refresh.

4)      Big data, intelligence and insight. 2017 was the year when the hype surrounding big data subsided as the industry moved beyond prototypes and began implementing real-life, large-scale applications. In 2018, big data will be vital to reducing IT operational costs and delivering advanced data capabilities. More insights from existing data sets, structured and unstructured, will help firms leverage other technologies, such as machine learning, algorithms and artificial intelligence (AI), in a more efficient way. This will help firms to utilise the insights in order to deliver a better client experience and optimise their operations.

5)      Industrialisation of blockchain. Similarly to the use of big data, 2017 was an exciting year for real-life blockchain projects as distributed ledger technology (DLT) moved beyond hype into the phase of industrialisation. A number of organisations have showcased a mature approach to blockchain solutions in the previous year and we saw a large number of interesting projects materialise – real change. 2018 is likely to be the year when we discover the real impact of DLT applications in financial markets.  Watch this space.