Through 2026 we will see a significant shift in the way that financial institutions operate. No longer just experimenting, banks are accelerating AI-led modernization across trading, risk and post-trade functions while advancing robust data and cloud programs to ensure scalability. However, this trend is accompanied by rising regulatory scrutiny. We expect 2026 to be defined by heightened demand for operational resilience, cyber risk management, AI governance and market integrity.
As 2026 gains momentum, the Canadian capital markets sector appears poised for a period of renewed activity and a more stable environment. With the easing of inflation and a series of rate cuts we are witnessing a resurgence in equity issuance, private credit and cross-border deals.
For any institution intending to grow in 2026, simplifying operating systems and technology platforms is a priority. This means confronting the existing patchwork of disparate systems deployed across different business lines – an environment that is expensive to maintain and scale and that often leads to process duplication and fragmented workflows.
Banks are starting to rationalize their platforms and are taking advantage of AI to modernize existing technology stacks. Most are taking a pragmatic and managed approach to improve productivity and internal controls while boosting efficiency and reducing costs.
Institutions are focusing on operational challenges such as document processing, exception management, anti-money laundering (AML) and client onboarding.
Other critical areas for simplification include cost optimization through workforce restructuring, vendor consolidation and real-estate rationalization. At the same time, banks are refining their operating models for private credit, digital assets and alternatives to meet increased OSFI expectations regarding cyber, third-party risk management (TPRM) and climate risk.
Operating model simplification: at the top of the to-do list
Banks are starting to rationalize their platforms and are taking advantage of AI to modernize existing technology stacks.
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The tools for technological transformation: cloud and AI lead the way
Compared to a year ago, the sector is far more open to AI transformation
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Aside from the operational activities listed above, we see a growing role for generative AI across surveillance, research, credit, risk modeling and client service, as well as model risk management and AI governance. Cloud modernization is also crucial for compute-intensive analytics, running in parallel with investments in cyber resilience and digital fraud analytics to better protect institutions against criminal activity in the financial sector.
When it comes to deployment, firms increasingly prefer cloud-based Software as a Service (SaaS) solution rather than in-house builds to avoid the cost of maintaining bespoke systems and the teams that manage them. In some cases, banks are reassessing whether their current solutions are truly fit for purpose or if they need to be replaced entirely.
Compared to a year ago, the sector is far more open to AI transformation. We have moved away from the sandbox phase where AI was purely experimental. Today, firms are building solutions for discrete processes that offer positive ROI, with work often focusing on commoditized, processing-heavy functions such as trade processing, reconciliation and control functions.
In the pursuit of growth, Canadian banks are aggressively scaling up and widening their market presence. This expansion includes enhancing FX, digital assets, commodities, structured products and private credit distribution.
There is a strong trend toward modernizing trading and post-trade infrastructure, specifically electronic trading platforms, collateral and margin systems, and clearing and settlement workflows. We also see ongoing modernization in corporate and transaction banking, particularly through real-time payments and digital cash management.
To expand their client base, many Canadian institutions are looking beyond domestic borders. This includes scaling capital markets operations in the United States to capture higher-growth origination, advisory and trading opportunities, as well as expanding footprints in London and Europe.
If a firm wants to grow its product offering, it must often leverage markets where growth is higher. Many of our clients are becoming more global in their outlook and focusing on their offices in major financial hubs to drive this expansion.
In addition, banks are looking to offer multi-product solutions to their clients by enhancing cross-business connectivity, including in high-margin segments such as wealth management.
Scaling product and market capabilities: a strategic path to growth
If a firm wants to grow its product offering, it must often leverage markets where growth is higher.
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Banks are focusing their efforts on analytics to better understand and reduce their risk profile.
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The high degree of uncertainty across the global geopolitical landscape is having an impact on Canadian banks. Factors such as shifting inflation dynamics and fiscal policy remain unclear, leading banks to adopt a more conservative posture.
Capital markets firms are responding to this uncertainty in two ways. First, many are focused on becoming more efficient and continuing to grow despite the headwinds. This efficiency drive is also a response to heightened regulatory oversight, as banks figure out how to meet regulatory requirements while managing overall costs.
Second, in this environment, risk management is more important than ever. Banks are focusing their efforts on analytics to better understand and reduce their risk profile. Ultimately, the goal is to improve risk analytics at a volatile moment in history while simultaneously running process efficiency initiatives to keep costs manageable.
As we navigate 2026, it is clear that greater efficiency is key for survival and growth in Canadian capital markets. To achieve this, firms must fully embrace AI, not just as a tool for the back office, but as a core component of their business model.
This shift demands a complete rethink of banks’ talent strategy. As firms pivot toward AI, they must address how to enhance their talent pool. Increasingly, employees are asking how the AI rollout will impact them personally.
Operating in this new environment requires a different skillset and, perhaps more importantly, a different mindset. Enhancing the talent pool to operate in this new, AI-enabled environment is a top priority for financial institutions seeking success in 2026 and beyond.
Moving forward: the new mindset
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Canadian institutions are already well on the journey to harness the power of AI. For example, at its 2025 Investor Day, TD outlined a multi-year efficiency program, targeting between $2 billion and $2.5 billion CAD in annualized cost savings. These savings are explicitly tied to investments in automation and AI, among other factors.
Similarly, RBC has been praised for its innovative Aiden electronic trading platform, which uses AI to improve execution. Such systems can cut earnings-publication times by up to 60%.
Across Canada, we are seeing strong demand for ‘forward engineering’ with AI where clients identify use cases that can provide an immediate positive return. Capco already has several use cases in its sandbox that can act as accelerators for capital markets institutions looking to modernize their platforms.
The race has begun: banks take the AI initiative
Capco already has several use cases in its sandbox that can act as accelerators for capital markets institutions looking to modernize their platforms.
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No hiding from geopolitics: uncertainty stalks the globe
Originally published in AltEnergyMag.com
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Originally published in Financial Advisor
Top five trends for 2026
Canada Capital Markets
As 2026 gains momentum, the Canadian capital markets sector appears poised for a period of renewed activity and a more stable environment.
Carmina Venditti | Partner | carmina.venditti@capco.com
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