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Over the past 20 years, global equity markets have almost trebled in size, reaching a total market capitalisation of USD 109 trillion in 2023 and the fixed income market is even larger, with just under USD 136 trillion securities outstanding at the end of the year. While this is an opportunity for financial firms, many firms, specifically on the sell side, may struggle to capitalise on this lucrative potential due to various complex challenges.

Firms that fail to keep up with innovators in their peer group risk losing market share and reducing their profitability. Outdated technology can also lead to higher operational costs, in terms of maintenance and upgrades, and manual processes can add unnecessary speedbumps into processes that more advanced systems avoid with automation.

As regulation evolves, particularly in areas such as data privacy and cybersecurity, firms that do not keep up with technological advance may struggle to comply, inevitably leading to fines and reputational damage.

Most especially, by not leveraging the latest technology, firms may miss out on opportunities to improve their services, develop new products and expand into new markets.

The complexity of technological challenges in the financial industry cannot be overstated. Financial firms generate vast amounts of data, and managing this data – storing, organising, and analysing it to extract valuable insights effectively – is a significant challenge. As financial firms rely more heavily on technology, they become more vulnerable to cybersecurity threats. Protecting sensitive data and maintaining the security of systems is an ongoing challenge. With the proliferation of new technologies, integrating various systems and applications is also complex and time-consuming. This includes ensuring seamless data flow and interoperability between different systems.

As firms grow and expand their services, their technology infrastructure must be able to scale accordingly. This requires careful planning and ongoing monitoring to ensure systems can handle increased demand without sacrificing performance or security.

Regulatory compliance is a significant challenge for financial firms, particularly as regulations continue to evolve. Technology can help firms stay compliant, but implementing and maintaining compliant systems is resource intensive.

In this article, GreySpark explores these challenges and how strategic IT planning is critical, empowering firms to transform themselves and unlock unprecedented growth.

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