The Future of Finance Is Now

The Future of Finance Is Now

Players in the global financial market must take action today to gird themselves for the future.

Intro

What Does the Future Look Like for Finance?

Extraordinarily rare is the person who can truly predict what the future holds in store, but sometimes a look at the present is all it takes to recognize arising opportunities. The financial industry is at a critical juncture and must come to grips with radical change. Business models are changing practically by the week, and all actors without exception currently find themselves at a crossroads. They are on the lookout for ideas on how to continue generating growth.

Many of the new ways of thinking are rooted in new technologies, infrastructures and data. The challenge is to utilize their full potential to tap new customer segments. We at SIX are working closely with our clients to futuristically transform the financial markets of today.

Future of Finance Study

Future of Finance Study: a Positive Outlook

Around the world, business leaders in finance expect the overall economic environment to improve over the next 12 months – a key finding in the Future of Finance Study from SIX. Despite current inflationary pressures and low growth, they believe they are well positioned for the future.

As to what is driving growth expectation, adoption of new business models is one of the most commonly given reason, as well as internal efficiency savings generated by digitalization. Advanced data & analytics are also recognized as a major driver of potential business expansion. Another driver for growth is new and alternative asset classes, including crypto. Emerging sustainability concerns are also seen as opportunities to be grasped rather than the imposition of unwanted regulation.

The biggest drag on growth is likely to be the industry’s continuing skills shortage. Financial institutions are looking at more flexible working patterns that include hybrid and remote working, as well as strategic partnerships.

Growth Expectations in a Time of Economic Uncertainty

Senior executives in the global banking and finance sector are bullish about their future growth prospects, even as central banks predicted a decline in GDP and technical recession.

More than 90% of business leaders believe that their organization is positioned for strong or moderate growth over the next three years, with US respondents the most optimistic about their growth trajectory. What’s more, 66% expect the economic environment for their business to improve by the end of 2023, while an even greater number (more than 70%) believe that inflation rates would slow by the end of the same year.

How Strongly Do You Expect Your Organization to Be Positioned for Growth over the Next Three Years in the Face of Rising Inflation and Interest Rates?

ESG Gains Traction but Data Gap Needs to Be Bridged

Because the focus on ESG is a relatively recent phenomenon, the current market does not yet have the same level of historical data available as with more traditional asset classes. The maturity of data-related products in the market is widely anticipated by the financial institutions who took part in the survey. In particular Alternative ESG data sets, aggregated ESG data sets, and the raw, underlying data points constitute the biggest data gaps in the market when it comes to ESG-related data products.

There are, however, some differences in focus among different types of institutions. For wealth managers, the most pressing need is for fundamental ESG/ratings. Among asset managers it is the underlying data points, and for investment banks it is alternative ESG data sets.

To Which ESG-related Data Products Do You Feel There Is a Gap in the Market That If Filled Can Help Meet Your Needs the Most?

Top Mentions by Type of Financial Service

Wealth Managers

45% 45%
Fundamental ESG/Ratings

Investment Bankers

39% 39%
Raw/Underlying Data Points

Investment Bankers

38% 38%
Alternative ESG Data Sets

The Skills Gap: Collaborative Solutions Move Up the Agenda

To plug the gap of skills needed, the surveyed financial institutions predominantly prefer headhunting experienced professionals. However, another common strategy is also the most interesting and the most sustainable: establishing strategic partnerships that complement existing in-house capabilities.

Respondents increasingly recognize that future growth depends on embracing a spirit of partnership and collaboration, building on existing relationships, and asking more of providers of various core and non-core services.

What Measures Is Your Organization Predominantly Employing to Plug the Gap of Skills Needed?

Digitalization Increasing as Positive Anticipation Surrounds Distributed Ledger Technology

Naturally, technological challenges remain. The most widespread opportunities that organizations will focus on over the next three years are capturing value from data & analytics, incorporating and supporting hybrid working patterns, and moving legacy applications to the cloud.

However, the adoption of distributed ledger technology is also seen as one of the major technology challenges to be addressed. More than half (56%) of all respondents consider it to be very relevant to their business over the next three years. An additional 28% say it will be even critical, while those that say it is not relevant at all amount to just 2% of all survey respondents.

To What Extent Do You See Distributed Ledger Technology-Based Solutions and Services Impacting Your Business in the Next Three Years?

Discover More

Further Glimpses into the Future

DeFi, DApps, and the Like: How the Financial System Is Becoming Decentralized

Now that the word “blockchain” appears to have crept into everyday parlance, neologisms like “DeFi” and “DApps” are going around these days. Find out in this blog post what they mean and how they’re changing the world of finance.

Data Facilitates Markets

The importance of data goes beyond just being a source of income: Data links different businesses and even industries together. Read how data creates transparency, makes processes more efficient, and enables growth.

What Is This Metaverse Thing Anyways? And What Does It Mean for Banks?

At least since Facebook changed its name, the term has been on everyone’s lips: the metaverse. What’s it all about? What do NFTs have to do with it? And what does it all mean for banks?

eBill: Less Greenhouse Gases from Swiss Payment Transactions Thanks to Digital Invoices

With more than 50 million transactions in 2021, eBill is now established as the digital invoicing standard in Switzerland. The environment benefits, too. Learn how much greenhouse gas digital invoices save compared to paper invoices.

Open Banking: Taking a Wait-and-See Approach Can Get Expensive

The initial obligation to open banking has now turned into a dynamic international competition. Sven Siat, Head Connectivity in the business unit Banking Services of SIX, explains why reluctance will not pay off also for the Swiss banks: Those who do not provide up-to-date programming interfaces in the future will not have a lasting business model in the long run.

Wealth Management in Change: 4 Competencies the Industry Needs to Build for the Future

Like other business areas within the Swiss financial center, wealth management is facing major challenges. What adjustments to the business model are necessary? Find out which competencies will be helpful in connection with data and technology.

The Future of Finance Is Now

The Future Has Already Begun at SIX

SIX guarantees stability for financial markets and keeps its promises to customers. At the same time, we constantly prove that we deliver innovation even during times of great change. The future of the financial industry is unfolding here and now before our very eyes.

The Future of Assets Is Digital

With the SDX digital exchange, SIX is building a fully integrated, trading, settlement, and custody infrastructure for digital assets in a regulated environment based on distributed ledger technology. This now also includes services in the area of decentralized finance, or DeFi for short. SDX Web3 services are directed at institutional clients and are concentrating initially on the largest applications in DeFi: cryptocurrencies, NFTs, and other asset tokens.

ESG Data: Already Indispensable in Investing Today

Investors are increasingly inquiring about how their investments or portfolios align with ecological, social, and ethical aims. However, reliable information on ESG (environmental, social, and governance) criteria is vital in the future not just for investment consulting, but is indispensable also for risk management and financial institution compliance. Sustainability criteria and transparency regulations for securities issuers and financial products are constantly becoming ever stricter. SIX supports its customers by providing them with consistent and comparable ESG data, including regulatory data as well as performance indicators and special ESG indices.

New Business Possibilities with Open Banking

Open banking brings banks and fintechs together, thus enabling the co-creation of new customer-centric solutions. In other words, with the consent of a bank customer, a bank can share data with a fintech or other third-party provider. This, in turn, lays the foundation for the creation of new services with added value. We are still in the early stages of a trend that will forever change the financial industry. bLink from SIX already ensures today that collaboration and the flow of data can proceed securely, efficiently, and in a standardized way.

The Latest Finance Technology for the Swiss and Spanish Financial Centers

SIX supports national and international startup companies from the world of finance that have ideas and solutions for new services, design more efficient processes, or aim to tap new customer groups. SIX FinTech Ventures is a 50 million Swiss francs corporate venture capital fund that invests in early-stage startups around the world. This enables us to support the Swiss and Spanish financial centers with cutting-edge technologies, innovative solutions, and revolutionary business models. For independent fintech startups that are also capable of growing on their own and which meet a true customer need, SIX is a partner on equal footing.