Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Highlights
- Investment operations have long been viewed as a post‑trade support function focused on efficiency and risk mitigation; they are now transforming into a data-driven core capability that directs investment product delivery.
- Capital markets are rapidly moving toward a continuous and programmable paradigm. Tokenised real‑world assets—ranging from U.S. Treasuries and money market funds to bonds, deposits, and fund shares—are no longer experimental pilots. They are being issued, traded, and serviced in live production environments.
- The convergence of deep capital markets expertise with advances in AI, data, and digital engineering is reshaping how buy‑side firms think about operating models. Organisations are reimagining their foundations to support near‑term innovation while ensuring resilience, regulatory compliance, and scalability for the future.
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Overview
Investment operations are at a defining moment. Long viewed as a post‑trade support function focused on efficiency and risk mitigation, they are now transforming into a data-driven core capability that directs investment product delivery. Driven by the convergence of tokenisation, artificial intelligence, and evolving sourcing models, investment operations are becoming the central source of insights for decisions on how buy‑side firms compete, scale, and build resilience.
Capital markets
Capital markets are rapidly moving toward a continuous and programmable paradigm. Tokenised real‑world assets—ranging from U.S. Treasuries and money market funds to bonds, deposits, and fund shares—are no longer experimental pilots. They are being issued, traded, and serviced in live production environments. As settlement cycles compress from days to near‑instant execution, the traditional separation between trading, clearing, settlement, and asset servicing begins to blur. Assets, cash, and workflows are becoming natively digital, enabling atomic settlement, real‑time recordkeeping, and automated lifecycle events. For buy‑side leaders, this represents a fundamental shift in how investment operations must be designed and governed. Recent trends of tokenisation adoption among top asset managers include:
- Allowing fractional access to ETFs(Exchange-Traded Fund).
- Supporting digital bond issuance.
- Offering a tokenised treasury share class.
- Transforming alternative investments like private equity and real estate into tokens.
AI transformation
At the same time, artificial intelligence is undergoing its own transformation. AI is moving beyond point solutions and task‑level automation to become the operating fabric of investment operations. Intelligent systems now support reconciliation, exception management, surveillance, corporate actions processing, and regulatory reporting, increasingly with human supervision rather than manual execution. The emphasis is shifting from ‘running processes’ to ‘orchestrating outcomes.’ Accountability is migrating toward data quality, model governance, explainability, embedded controls, and measurable value delivery across the trade lifecycle. Recent trends among firms include
- Centralising AI/ML platforms to increase governance.
- Implementing AI self-service tools to increase customer satisfaction.
- Integrating AI into financial tools like budgeting apps.
- Offering GenAI Analyst Assistant tools to boost efficiency.
Solution
Incremental optimisation alone is unlikely to prepare firms for the next era of investment operations. Buy‑side leaders must redesign operating models around programmable assets, AI‑led control, and data as a strategic foundation.
These structural changes are also reshaping sourcing decisions. As AI lowers the marginal cost of processing and improves straight‑through processing rates, many investment firms are reassessing traditional outsourcing arrangements. A new hybrid operating model is emerging—one that brings core lifecycle capabilities, proprietary data, and decision‑critical processes back in‑house, while selectively sourcing standardised reporting and utility‑based services. This shift offers greater agility, faster innovation cycles, and enhanced client experience, while introducing new considerations around upfront investment, talent acquisition, and governance. About a quarter of asset managers plan to insource their middle- and back-office functions, while most use a hybrid model. Trade life cycle capabilities are being brought back in-house, while reporting functions are being outsourced. This sourcing shift enhances agility, increases proprietary data control, and provides a better client experience.
Operating model redesign, therefore, becomes imperative rather than optional. New roles are emerging across investment operations, including AI operations owners responsible for end‑to‑end performance, control‑by‑design leaders embedding compliance directly into workflows, data and lineage stewards ensuring trusted golden sources, and value realisation owners tying AI adoption to tangible metrics such as cost per trade, settlement fails, and cycle‑time reduction. Human expertise remains critical, but increasingly in a ‘human‑in‑the‑loop’ model where professionals supervise intelligent systems, manage exceptions, and exercise judgment where it matters most.
For senior buy‑side executives, the question is no longer whether these changes will materialise, but how quickly their organisations can adapt. Firms that continue to rely on incremental process improvement risk being constrained by operating models designed for an intermediated market structure. Those that act decisively—re‑architecting investment operations around programmability, AI‑enabled control, and flexible sourcing while managing the dual-track co-existence —will be better positioned to operate with speed, resilience, and confidence in an environment defined by continuous markets and heightened regulatory scrutiny.
Conclusion
Investment operations should be viewed not merely as a cost centre to be optimised, but as a strategic capability to be reimagined. By combining capital markets expertise with AI, data, and digital engineering, buy‑side firms can design operating models that are future‑ready—supporting innovation today while remaining resilient, compliant, and scalable for what lies ahead.