Ahead of The Curve:
2025 Innovation Priorities for Capital Markets

In 2025, global capital markets are set for growth amid stabilizing economic conditions and more accommodative monetary policies. Central banks worldwide are expected to continue cutting rates, lowering borrowing costs, and stimulating investment activity. To capitalize on the growth, both buy-side and sell-side firms will be driven by AI, blockchain, and digital transformation to enhance agility, efficiency, and client-centric innovation.

On the buy side, artificial intelligence (AI) and machine learning are set to improve portfolio management, trading strategies, and risk assessment. Asset managers will increasingly rely on predictive analytics and natural language processing to spot market trends, optimize asset allocation, and find alpha-generating opportunities. Blockchain technology will gain traction, improving transparency and efficiency in trade settlements and reporting. Additionally, digital platforms will expand access to alternative investments like private equity and tokenized assets, meeting the rising demand for diversification among institutional and retail investors.

On the sell side, technology will transform client engagement and transaction execution. Firms will prioritize faster settlement cycles, workflow automation, and the adoption of AI and machine learning for trading, risk management, and customer service. Cloud computing and data integration will enable advanced analytics and personalization, while digital asset regulation and infrastructure modernization will remain critical. As cybersecurity threats rise, firms will invest heavily in advanced threat detection systems to protect sensitive data.

Capital market leaders must closely monitor the following industry transformations to achieve success in the coming year.

1. Mature Generative AI and Prepare for Agentic Enterprise

Artificial intelligence provides capital markets firms with new tools for enhancing data analysis, personalization, and operational efficiency. Initially, many firms used GenAI for simple efficiencies, such as aiding contact center agents with immediate next-best actions. However, by building modern data platforms and integrating advanced GenAI capabilities, firms can significantly improve productivity and cyber defense and offer personalized experiences that stand out in a crowded market. As AI matures toward more agentic capabilities, firms can automate complex decision-making processes, further enhancing service delivery. According to our recent survey of wealth management CXOs, 65% of industry leaders believe that AI will transform client relationship management in the next one to two years.

2. A strategic shift to industry-specific, hybrid, and AI-optimized clouds

Cloud computing in capital markets is undergoing a strategic transformation driven by the adoption of industry-specific cloud solutions and the rise of edge computing, which processes data closer to its source for faster insights. This approach provides flexibility in data handling and enhances security measures, particularly in areas like fraud detection, where AI-optimized clouds analyze vast amounts of transactional data in real time. As firms upgrade their infrastructure, AI-optimized cloud solutions will become vital for handling vast data estates and unlocking advanced analytics capabilities. Industry cloud solutions will also require strong regulatory compliance frameworks — a growing concern given recent data showing that 68% of financial services firms are focused on the ethical and regulatory implications of their AI programs, such as ensuring AI decisions are fair and transparent and complying with data privacy regulations.

3. Rationalizing Data, Uncovering Value

Many capital market firms are grappling with the limitations imposed by legacy data warehouses and the growing volume of data fragmented across disparate trading, CRM, reconciliation, and custodial platforms and other systems. These fragmented data systems hinder them from achieving new efficiencies and, most importantly, turning their data into revenue-generating assets. Data monetization offers a clear path to new revenue. Therefore, firms need to accelerate the shift towards cloud-based solutions and data modernization accelerators that can efficiently manage data's increasing volume and velocity. Companies must also implement strong data governance frameworks and encryption techniques to protect sensitive data throughout the monetization process. Suppose firms can overcome the constraints of legacy systems. In that case, they will be well-positioned to unlock data monetization while also gearing up for other AI-driven competitive advantages (for example, creating machine learning capabilities that can more accurately forecast market movements).

4. The next wave of automation

AI-driven automation is disrupting traditional roles, prompting firms to upskill their workforces to thrive in a future defined by human-machine collaboration, where technology augments rather than replaces human expertise. Firms are now seeking to go far beyond the robotic process automation (RPA) capabilities of the past by automating routine tasks and complex analytics and decision-making processes. For example, AI platforms are now enabling the creation of AI-driven investment strategies (including portfolio structuring, asset price forecasting, volatility forecasting, and algorithmic trading) that dynamically adapt to market shifts in real time. Meanwhile, AI copilots are emerging as intelligent assistants capable of streamlining workflows, enhancing decision-making, and providing personalized insights.

5. Blockchain unlocks new efficiencies and asset classes

Blockchain is poised to transform the infrastructure side of capital markets, particularly in clearing and settlement processes, by leveraging distributed ledger technology (DLT) to speed up transactions and lower costs. For instance, blockchain can streamline the clearing and settlement process by automating many manual steps, reducing the time and resources required. Of course, it’s also fundamental to cryptocurrency. However, for many firms, one of the most critical near-term use cases for blockchain will be advancing the tokenization of assets. Tokenization enables fractional ownership of traditionally illiquid assets like real estate, commodities, and fine art. Blockchain’s role in tokenization is attractive to both retail and institutional investors seeking to diversify their portfolios. The key to successful blockchain adoption is integrating tokenized assets into existing trading platforms and developing partnerships with blockchain innovators. This means, among other things, that asset servicing firms may need to pivot from focusing primarily on post-trade services like clearing and settlement to prioritizing digital asset exchanges and custody solutions that can be integrated with existing technology and processes to run properly in regulated environments.

As capital markets firms strive to gain new competitive advantages in the face of intense competition, they must carefully consider how technology can transform customer relationships, unlock new revenue streams, and even create and support entirely new asset categories. The sheer number of opportunities can be overwhelming. For many firms, the most significant strategic challenge of the coming year will be deciding between numerous technology investments and innovation pathways that have high potential for ROI. Instead of succumbing to the fear of missing out and chasing technology trends, the most effective strategies will start by looking inward. Every firm’s data landscape is unique, and strategies designed to maximize the value of the firm’s exceptional level of data maturity will be most likely to lead to successful outcomes.

About the Authors

Madhusudan Ponnuveetil
US Regional Head, Capital Markets, Domain & Consulting

Pankaj Gupta
Global Head of Consulting – Insurance & Capital Markets

Ahead of The Curve: 2025 Innovation Priorities for Capital Markets

About the Authors

Ahead of The Curve:
2025 Innovation Priorities for Capital Markets