How Capital Markets Firms Can Capitalize on Digital Transformation

Aligning Through Orchestration: How Capital Markets Firms Can Capitalize on Digital Transformation for Success

By George Black, Capco

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It seems that every new technology investment is viewed as advancing a company’s “digital transformation” goals, but the end results often seem less than transformational. New technologies and platforms do not inherently unlock value for a business, rather it is how these platforms are used by the organization to achieve its goals that dictates whether an investment meets its business case. Digital transformation depends as much on a company’s capabilities as on its ability to orchestrate those capabilities across customer and business touchpoints in a cohesive and efficient manner.

Key dimensions of digital orchestration maturity

From automating sales and trading to modernizing risk, the goal of any digital transformation in a capital markets business is to capitalize on its resources, maximize return on investment, and elevate the company to market leader status.

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  1. Modern organization – Information should be shared across the organization in an effort to break down silos and create a culture of collaboration between different departments across the value train. In today’s remote, hybrid and distributed workforce environment, companies need to focus on equipping staff with the right tools to collaborate (e.g. JIRA, Symphony), create open-to- across different companies and product organizations, and enable cross-sharing of processing. ideas. Financial institutions should adopt a “fail fast, fail often, and fail forward” mantra that is key to any digital transformation. By aiming to create solutions in short, sprint-like cycles, financial institutions are building the foundation for a culture of rapid execution that can dramatically improve a business’s transformation timeline. Finally, being modern in the context of digital transformation means creating a meritocratic dialogue between the front, middle and back office, as well as technology and support functions.
  2. design culture – Capital markets firms must embrace creative thinking to equip employees across multiple industries with innovation skills to co-create and drive innovation across functions. Connecting several different product teams and companies, Citi’s D10X Innovation Lab has acted as a hot “design” bed for new ideas, including uniting different companies to co-create enterprise solutions for better results. for customers and end users. One of its results is a fusion of customer experience and computer programming – the Survey Engine, a machine learning and natural language processing system that automatically answers customer questions. It is a perfect example of how different companies can co-create and solve cultural and logistical challenges to generate and execute a new idea to reveal hidden value within client organizations.
  3. Multi-product infrastructure – The wide range of capabilities expected of a modern capital markets firm combined with an ever-changing regulatory landscape creates a complex challenge. Businesses cannot review roadmaps at a single product level, but must adjust and create roadmaps at the enterprise level. Consider a combination of internal and external pressures affecting financial market firms today. On the one hand, Basel IV and the IRB Repair Package regulations require companies to implement holistic risk and capital management practices at the enterprise level. On the other hand, enterprises are under internal pressure to provide scalability and analytics capabilities to manage capital and balance sheet in real time, independent of highly fragmented operating models and data architecture/ existing computer. As one of the antidotes, the push for cloud-based infrastructure addresses this complex requirement on many levels and reinforces “orchestration” thinking. Considering all the risks (e.g. information security, data privacy) and benefits, as well as ensuring highly collaborative and orchestrated transformation efforts, dynamic cloud infrastructure can dramatically increase agility and scalability across an enterprise while reducing integration barriers and costs.
  4. Experience-driven company – These are businesses and business capabilities aligned and structured around customer/user experiences. While experience traditionally defines customer/end-user interfaces or products at best, leading financial markets firms are ensuring that experience defines their entire business. Consider prime brokerage – some capital markets firms have traditionally focused their digital transformation efforts on specific services offered to hedge funds (e.g. trade capture, asset management, regulatory reporting). However, market-leading companies are focused on creating a complete experience through an experiences platform – whether it’s access to specific data, competitive pricing, financing, connectivity trading or real-time risk reporting. By focusing its entire business on experiences, a company can ensure that its digital transformation efforts are aligned and maximize differentiated value for customers and end users.
  5. Customer-centric – Reinforce a better understanding of your customer and continually deliver more value for customers. Enter customer-centric analytics: Use data to gain visibility into the cost of customer acquisition and lifetime value of current partnerships. Insights based on customer behavior data aid in marketing, benchmarking, and new customer acquisition. Benefits realized include more accurate customer segmentation, better insight into customer profitability and cross-selling opportunities. In one example, JP Morgan launched a proprietary customer relationship management (CRM) and sales and transaction analytics platform where the system pulls data from corporate and institutional customers along with their past transactions and behaviors , helping the seller to suggest the most suitable transactions to the customer.

Measure the maturity of your company’s capabilities

While the orchestration takes the gist of the argument for truly enabled digital transformation, the importance of capabilities cannot be ignored. Capacity maturity refers to a company’s ability to evolve and provide differentiated service to its customers. Capability maturity signifies the players and tools of the sports team. For capital markets ‘players’, this refers to the modern technologies, tools and skills that the firm deploys to bring value to its clients. There are five key pillars that underpin maturity capabilities – strategy, design, technology, QA and validation, and approach/process – all of which reinforce the need for companies to employ framework and enterprise-wide standards in digital capability transformation.

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Where are you on your orchestration and capability maturity journey?

Companies that don’t foster a collaborative environment that allows ideas and information to flow freely between teams can find themselves trapped as “sleeping giants” or “fundamental organizations.” Meanwhile, “market leaders” combine the best of both in digital transformation: continuously improving its capabilities and creating a meticulous orchestration environment across all levels and functions of the organization.

George Black is a partner and US head of capital markets practice at Capco, a global technology and management consulting firm and can be contacted at

The references

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