2015 Capital Markets Outlook

Capital markets firms are trying to move on from painful restructuring to a more sustainable and profitable future. In short, they are preparing for takeoff. But this does not mean that their flight path will be smooth. In this outlook, we highlight six areas that capital markets firms will likely have to prioritize in 2015.

See below for a high-level overview of the six trends and key priorities for capital markets. For the full view into the expected capital markets trends, download the report.

This outlook is part of Deloitte’s Financial Services Industry Outlooks series which provides insights and trends for banking, insurance, investment management, and commercial real estate. The full series will be available in January 2015. 

Revenue streams

In a shifting environment dominated by tighter capital and liquidity constraints and the prospect of changing monetary policy, capital markets firms must be nimble. Firms may want to consider:

• Developing versatile operating models that allow them to quickly scale in growth areas
  
• Building a pipeline for talent to seize expertise-driven opportunities
  
• Finding new areas for growth by looking to ease clients’ pain points

Balance sheet efficiency

Firms should identify areas where they can retain a competitive advantage as they weigh tough balance sheet choices, including:

• Meshing asset profitability assessments with internal CCAR exercises to provide greater clarity and consistency with regulators and shareholders
• Constructing playbooks that define optimal balance sheet structures to boost preparedness and improve response times

Regulation and transparency

Capital markets firms will be finalizing strategies and programs to respond to new regulations. Equity markets and swap dealers may want to consider:

• Identifying gaps in existing infrastructure, consolidating reporting systems, and assessing existing customer data to prepare for Consolidated Audit Trail specifications 
• Adjusting business and operating models to drive ROI

Risk management and risk culture

Top priorities in risk management will be aggregation of risk across the trade lifecycle, investment in analytics, and strengthening an ethical, risk-minded culture. As firms pursue these objectives, they may want to consider:

• Investing with an eye toward critical issues such as cyber risk and risk data
• Integrating risk management and ethical goals into compensation

Technology and data

Firms should be redesigning their technology architecture by embracing modernization, simplification, and automation, and consider:

• Adopting new approaches to data governance and deploying data analytics techniques to drive business value
• Focusing on smooth integration of legacy systems 
• Developing a new breed of technology leadership that accelerates tech change by being in tune with the business agenda

Client value optimization

After years of trimming noncore business lines and geographic markets, firms’ efforts to prepare themselves for growth will take a hard look at client profitability including:

• Implementing better data, improved segmentation, and realignment of sales incentives to ensure current relationships are economically valuable
• Integrating regulatory demands to refine client data and analytics
• Reexamining client profitability to guide the level of customization offered in product solutions and service delivery models