Dean Berry
Having worked in financial markets since the 90's, I don’t believe there is such a thing as ‘normal market conditions’. That said, the last three years have been a wild ride, and there is reason to envisage a more stable environment this year. Meanwhile, financial markets workflows are transforming at a pace unlike anything I’ve seen in my career. The combination of GenAI, cloud, automation, personalisation, and interoperability – all underpinned by a critical requirement for differentiated data and content – is creating incredible opportunities…and significant challenges.
A return to more ‘normal’ markets?
2023 saw inflation and interest rates peak, the US regional banking crisis and collapse of Credit Suisse, and further softness in capital markets activity, with M&A volumes at a ten-year low. All this happened against a backdrop of geopolitical conflict, ongoing energy transition and decarbonisation, and a continually evolving regulatory landscape.
As we look to 2024, there are grounds for cautious optimism, and many analysts expect a more normalised financial markets landscape. The macroeconomic picture is improving. Inflation is easing, and central banks are expected to cut rates during the year. M&A activity increased over 20% in the fourth quarter of 2023 compared to the third quarter. Equity markets had a torrid year-end run. Risk appetite is returning among investors as evidenced by recent fund flows.
So we could indeed see a normalisation of markets in 2024. Then again, with many high-impact elections ahead, ongoing geopolitical turmoil, and other unexpected events to come, time will tell how markets unfold.
Regardless of underlying markets, it is undeniable that the workflow environment in financial markets is transforming before our eyes. Let me share my thoughts.
Generative AI is creating new possibilities but requires a thoughtful approach
The arrival of ChatGPT captured our collective imagination in 2023, and GenAI will continue to dominate headlines and management discussions across industries this year. Financial markets participants are rapidly exploring the application of GenAI to drive both performance enhancement and efficiency gains; however, given the control requirements they operate within, financial firms appreciate the need to do so in a thoughtful, responsible manner.
Experience to date has shown that GenAI is only as good as the content it is trained on, so a strong commitment to data accuracy and auditability is critical to successful application. Moreover, as access to large language models (LLMs) becomes increasingly democratized, the ‘alpha’ derived from GenAI will come less from the models themselves, and more from the underlying content they have access to and are trained on. Differentiated content and a strong framework around data rights management will be central to the conversation as GenAI takes root in financial markets.
Finally, firms must strike the right balance and interaction between human capability and AI. In an industry where stability and trust are paramount, human judgment, checks and balances, and communication skills remain indispensable. GenAI is a powerful complement to humans – not a replacement for them.
Automated, open workflows with humans as critical as ever
The requirement for end-to-end, interoperable solutions that offer a seamless workflow experience has never been stronger. Our customers demand best-in-class, multi-asset solutions across the investment, trading, and capital markets lifecycles. And they need relevant content and tools embedded within existing workflows. To achieve this, the buy-build-partner decision framework has given way to a preference for open, ecosystem-based environments, where participants can interact with like-minded counterparts, and a range of providers, through their channel of choice.
In Trading specifically, execution is increasingly automated and borderless, and we continue to see a shift towards automation, underpinned by trading analytics and data. That said, as highlighted in our recent Cross-Regional Equity Trading research report conducted with Coalition Greenwich, the human element remains critical to the trade process, especially when executing across regions. As a result, the trend to Outsourced Trading, focused toward technology-enabled providers, continues to gain momentum.
Customised solutions and personalisation at scale are expected
Interoperability of systems, platforms and applications, smart alerts and meeting preparation tools are driving productivity gains.
An open directory enables content discovery and collaboration by tailoring the experience to each user’s unique requirements; using large language models further enhances personalisation by providing users with precise answers to their professional queries.
This level of innovation and customisation is accelerated by cloud migration which improves accessibility to data and insights and allows faster solution development. It also enhances efficiencies.
All these trends are turbocharging demand for and consumption of data
Our customers demand the right data at the right time with embedded resilience, convenience, and adaptability.
For instance, data is also the lifeblood of generative AI, powering its ability to create content by learning patterns from vast datasets. This enables personalisation, with AI tailoring recommendations, products, and services to individual preferences. Besides, facilitating workflow automation is all about making it easier and more cost effective for users to bring data together in one centralised location, with data access, discovery and digital rights management being fundamental priorities for financial professionals.
As LSEG Group Head of Workflows, responsible for our flagship delivery platform LSEG Workspace, I am excited about the possibilities that 2024 will bring. My team and I continue to strive to delight our customers with seamless workflows, harnessing the power of LSEG data and analytics, and our transformative partnership with Microsoft.
All the best for 2024!
LSEG plays a leading role in powering workflows with essential data and content analytics, understanding the centrality of data in navigating the intricate landscape of financial markets. Discover our next-generation data and analytics workflow solution, LSEG Workspace.
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