Investment Banks Turning to Technology and Analytics to Manage Risk and Compliance via Capital Markets BPO Deals—New Everest Group Report

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Strong growth of 20 percent driven by need to minimize costs of regulatory compliance.

Four Key Factors Affecting Capital Markets BPO

Four Key Factors Affecting Capital Markets BPO

As the cost to maintain legacy systems rises and the associated benefits dwindle, buyers will more actively look towards replacements and platform-oriented solutions.

Third-party business process outsourcing (BPO) in the capital markets industry reached the US$1.7 billion mark in 2014, growing at a compound annual growth rate of 18 to 20 percent over last four years. This high growth rate was driven by the investment banking segment. Propelled by regulatory compliance initiatives, these financial institutions are increasingly turning to third-party providers as they seek to manage risk at the lowest possible cost.

Geographically, North America and the United Kingdom are the major growth drivers in the capital markets BPO industry, both characterized by substantial size and above-average growth rates.

“As for the future outlook for capital markets BPO, we highlight two trends likely to have significant impact,” said Rajesh Ranjan, partner at Everest Group. “The first pertains to effective leverage of technology. As the cost to maintain legacy systems rises and the associated benefits dwindle, buyers will more actively look towards replacements and platform-oriented solutions. However, the transition cycle is likely to follow a varied timeline for different segments – wealth management and brokerage are likely to lead.

“Secondly, the evolving regulatory landscape, especially in Europe—as most U.S. regulations are already in effect—also will have a significant impact on how financial institutions define their outsourcing strategies and capitalize on third-party relationships.”

These results and other findings are explored in a recently published Everest Group report: Capital Markets BPO Annual Report 2015 – Technology and analytics helping banks manage risk and compliance.

This report provides an overview of the capital markets BPO space, with a focus on market size and growth, buyer adoption trends, solution characteristics, and the service provider landscape.

Other key findings in the report:

  •     Investment banking continues to be the largest segment within capital markets BPO and is also growing the fastest
  •     The leveraging of technology solutions, including platforms, is experiencing an uptick, especially from small-sized buyers
  •     Only a handful of service providers have a well-diversified scope, indicating a higher demand for specialists in this industry
  •     In terms of market share by revenue, Avaloq, Cognizant, Syntel, TCS, and Xchanging are proximate leaders in the industry, but each has unique areas of focus and strengths

***Download Complimentary 10-page Preview Report Here*** (Registration required.) This preview summarizes the report methodology, contents and key findings and offers additional resources for further study.

***Download Publication-Quality Graphics***
High-resolution graphics illustrating key takeaways from this report can be included in news coverage, with attribution to Everest Group. Graphics include:

  •     Regulatory changes around the globe are driving high growth in capital markets BPO
  •     Four key factors affecting capital markets BPO

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at research.everestgrp.com.

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Andrea M. Riffle

Robert Cathey
Cathey Communications
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