Xceptor has released a new report, Operational Efficiency Is Driving Digital Transformation in Capital Markets, developed in collaboration with Crisil Coalition Greenwich. The report highlights how capital markets firms are rethinking their operational models amid rising trade volumes, increasing data complexity, and intensifying regulatory pressure.
Based on insights from over 70 C-suite and senior leaders across North America, Europe, the U.K., and Asia Pacific, the study sheds light on the urgent need for digital transformation and where firms are finding the greatest opportunities to evolve.
“Despite several benefits of digital transformation to improve workflow efficiency, many participants are taking more time to invest in these resources and legacy practices prevail. Our study uncovers hard dollar costs to holding out on adoption, which are set to increase as data volumes continue to grow and market uncertainty persists,” reports Audrey Costabile, Senior Analyst, Crisil Coalition Greenwich.
Digital transformation has become increasingly prominent in today’s volatile market and data-driven environment as record-breaking trade volumes place business leaders and operations teams under increased pressure. Manual processes are still prevalent across both buy-side and sell-side firms, who are keen to remove manual tasks that create data and workflow roadblocks for increased productivity and output.
Key findings include:
- Efficiency is the top priority: Nearly 90% of respondents believe digital transformation will enhance operational efficiency, yet fewer than one-third (28%) say it is broadly supported within their organizations, and one in 10 indicated no support from their organization.
- Barriers persist: Legacy systems (57%), cost concerns (56%), and manual data entry (39%) are the most often cited obstacles.
- Data is driving change: Improving data capture and transformation is a top focus, with 57% of firms planning to invest in workflow automation within the next year, and 58% of firms already having done so in the past twelve months.
- Multiple tools lead to siloed systems: Up to 5 different platforms are used to cover asset classes, with 95% of respondents saying that no single platform can cover them all, leading to disjointed workflows and data silos.
- Middle- and back-office are still heavy on manual processes: Manual intervention continues to dominate critical processes, especially for regulatory reporting (80%), client onboarding (79%), and trade reconciliation (77%). Most exceptions take hours—or even a full day—to resolve, increasing operational risk and inefficiency.
- Manual work is costly: Nearly 60% of respondents acknowledge the financial burden of exception handling, with almost 60% citing the need to put up to 5% of annual capital aside to cover remediation costs each year.
“As trade volumes continue to rise and regulatory demands such as T+1 and the EU Faster Initiative intensify, firms are under pressure to modernize or risk falling behind. The Crisil Coalition Greenwich report confirms what we continue to witness firsthand in the industry: Getting data right through automation and AI is a top priority for all industry participants. Firms that embrace market collaboration will be best placed to accelerate ready-to-trade, ready-to-settle and ready-to-report processes through automation and AI,” says Michiel Verhoeven, CEO of Xceptor.
AI adoption is growing but uneven across the industry
The study also explored the state of AI adoption in the industry. While 60% see AI as important to their transformation strategy, nearly one-quarter believe it is not important. Despite growing awareness of AI’s potential, adoption remains cautious. Today, only one-third of firms report already using AI. Two in five (43%) plan to adopt AI in the next two years, and nearly one-quarter (23%) have no plans to adopt AI.
Key perceived benefits of AI adoption are enabling employees to spend more time on strategic work and automating manual tasks, while integration challenges, internal stakeholder buy-in, and management controls remain key concerns.
Commenting on the findings, Dan Reid, CTO and Co-Founder of Xceptor says, “AI has the potential to revolutionize how firms manage and transform data and workflows. To unlock this potential, adoption must be part of a strategic approach to data automation. Automating high-risk, manual processes can enable firms to reduce operational risk and improve regulatory compliance when implemented with effective controls in place.”