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READY FOR THE 2023 SECURITIES AND INVESTMENTS MEGATRENDS?
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contents
ESG on the rise
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Integrated software boosts efficiency
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Investors demand digital communications
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Where next for digital assets?
Harness automation and outsourcing
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2023 macro-economic conditions
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Foreword
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2023 SECURITIES AND INVESTMENTS MEGATRENDS
Insurance Risk Management without Compromise
FOREWORD
Did you know?
Jonathan Silverman Director of insurance solutions, Microsoft
Insurers are recognizing the value of having access to unlimited compute capacity for risk modeling and . . . making substantial cost savings with infrastructure related to the risk modeling workload.
“What the new year brings to you will depend a great deal on what you bring to the new year,”
– Vern McLellan
We expect 2023 to be a challenging year from a macroeconomic perspective, with many countries facing recession. The business environment will also be difficult, but FIS has the technology to support you. Read on to find out how our solutions could help your organization build resilience, reduce costs and benefit from growth through innovation.
With the new year just beginning, which megatrends should you be watching out for in 2023? And what about the resulting mega challenges? From automation and cloud to cybersecurity, and ESG, discover the topics that will be looming large for your business in the year ahead.
Insurance companies are more aware than ever of the wealth of information at their disposal. Their ability to extract value from data using advanced analytics has become critical to competitive advantage.
For actuaries, the pressure is on to gain greater insights from big data and rapidly transform modeling results into business intelligence.
Rick Yuan Head of actuarial modeling and transformation, AIA Group
We needed to run a projection tens of thousands of times to come out with a range of possibilities. One solution was to purchase more hardware, but the obvious winner was move to the public cloud. The beauty is you can tap that capacity when you need it and switch it off when you’ve finished the calculation.
2023 MACRO-ECONOMIC CONDITIONS
FIS offers a range of solutions to help you with these economic challenges, while improving efficiency and focusing on your core value-added services. As well as hosting our own cloud, we’re partnering with AWS, Microsoft, and Google to develop joint cloud projects. We’re also increasing our investment in cybersecurity, with a particular focus on harnessing artificial intelligence (AI) and predictive analytics to identify risk more quickly.
The rise in inflation, energy costs and supply chain problems are some of the biggest challenges for 2023. Additionally, the Great Resignation and labor shortages are contributing to increasingly difficult conditions. A global recession is predicted, so the need for efficiency, innovation and cost control has never been stronger. Cloud technology and software as a service (SaaS) remain key trends as current economic conditions drive demand for digitalization. Clients are increasingly adopting multi-cloud strategies, such as a combination of public and private clouds. However, this does come with more complexity and could require further resources. More attention is also being paid to controlling the cost of cloud solutions and cutting waste. Over 98% of U.S. organizations have experienced a cybersecurity incident in 2022*, so firms are focused on harnessing technology to improve cybersecurity.
Over 98% of U.S. organizations have experienced a cybersecurity incident in 2022*, so firms are focused on harnessing technology to improve cybersecurity.
With so much costly, inflexible IT to manage, your on-site infrastructure could be holding you back.
Cybersecurity
Macro environment
Cloud
*Source: The State of Supply Chain Defense: Annual Global Insights Report 2022.
HARNESS AUTOMATION AND OUTSOURCING
Business process as a service (BPaaS) is a cloud-based solution that can be used to automate repetitive tasks, increase efficiency and improve customer experience. Need some help focusing on the activities that generate revenue?
By leveraging advanced technologies like artificial intelligence, robotics and machine learning, FIS can help you automate repeatable tasks and free up your team to focus on value-added activities. We also have the capability and capacity to be your key outsourcing partner, especially in areas where your resources may be limited.
Firms are looking to automate wherever possible – and this is likely to be an even more pressing priority in 2023 as securities and investments firms look for ways to remove human intervention, reduce error rates and increase straight-through processing. For one thing, firms continue to face a heightened risk that they will lose key knowledge in the wake of the Great Resignation – and automation is an effective way that firms can manage with reduced headcount while speeding up tasks and reducing errors. At the same time, firms are increasingly looking at ways to reduce their cost structures by outsourcing their operations. Business Process as a Service (BPaaS) is a cloud-based solution that can be used to automate repetitive tasks, increase efficiency and improve customer experience. Need some help focusing on the activities that generate revenue? Our Business Process as a Service (BPaaS) will help you to automate repetitive tasks and increase efficiency so you can focus on the activities that generate revenue and drive customer value.
WHERE NEXT FOR DIGITAL ASSETS?
FIS can help you navigate this highly volatile market, its unfamiliar systems, and its lack of regulatory oversight. As an established digital asset solutions provider, we can help clients manage the change across payments, banking, and capital markets.
While cryptocurrency and blockchain continue to attract significant attention, many firms are approaching these topics cautiously given recent market developments. As we move into 2023, questions remain about the impact of future regulatory developments in this area. In the U.S., for example, IRS rules currently in the pipeline are expected to have an impact on the tax ramifications of cryptocurrency, which may have implications for broker-dealers. We expect further clarity on these new rules to be issued in the near future. For other types of firms, the focus is on blockchain technology rather than on crypto. In the private equity area, for example, firms are asking how blockchain technology could be used to streamline tasks related to investor servicing, such as Anti-Money Laundering and Know Your Customer checks.
Digital assets hold the potential for businesses to undertake rapid cost-effective transactions, with assets protected by secure blockchain technology. Is it time to look at the new opportunities digital assets could bring to your business?
INVESTORS DEMAND DIGITAL COMMUNICATIONS
Digital communication can help streamline your processes and make communication easier, faster and cheaper, while enhancing the user experience for your investors.
FIS can help you make the leap from traditional communication to digital. We understand that the customer experience is more important than ever, and we have the technology and solutions to support you. As a result of our new partnerships with Anduin and IDR, FIS clients have new opportunities to improve the investor onboarding process for both general partners (GPs) and limited partners (LPs).
Digital communications offer significant potential to save paper and reduce costs – and investor communications is one area where firms may be seeking improvements in 2023. That said, regulatory factors need to be considered. In the brokerage area, for example, there are rules in place regarding how and when confirmations of activity are sent. In private equity, meanwhile, the digitization of investor servicing and the use of digital passports can avoid the need for investors to repeat the same actions with multiple general partners (GPs). Listen here.
INTEGRATED SOFTWARE BOOSTS EFFICIENCY
At FIS we have been working on integrating data systems for years and believe that a fully integrated system is needed for effective data management, insights, and reporting. To fully transform your business there needs to be a digital transformation and we can help in areas such as API-led integration. Come and talk to us about how you can unlock the power of your data.
The coming year is likely to see a further focus on the benefits of integrated software applications and bundled or modular solutions. Controlling infrastructure costs is a major challenge for firms – and the costs involved in managing and supporting multiple systems can be significant. But gone are the days when firms had no choice but to depend on aging legacy systems with limited functionalities. Particularly in post-trade processing, platforms that combine core processing functionalities with add-on modules and components can speed up the implementation process, minimize the risk of disruption, and drive faster time to value.
If you are looking for more reliable data, enhanced analysis, improved data security and simplified decision making, it may be time to integrate your legacy software packages and systems. Are you making the most of your data?
ESG ON THE RISE
ESG investments continue unabated, driven by rising demand from both institutional and individual investors. According to Forbes (May 22), 10% of assets invested in funds worldwide are now in ESG funds.
At FIS, we’re developing the tools needed to meet investors’ needs for information, including advances in data processing and our partnerships with FactSet TruValue and the European Leveraged Finance Association (ELFA) to bring best-in-class solutions to our clients. We know that making a difference with environmental, social and corporate governance is a team effort. FIS is leveraging advanced technology (AI, robotic processing automation and machine learning) to help gather relevant ESG data. Further details on our work in this area will be announced later in 2023.
Bloomberg has suggested that demand for ESG investing is set to grow, with their experts forecasting that ESG-based products will account for $53 trillion AUM by the end-2025, after reaching the target USD30.6tn at the end-2021. On the debt-issuance front, ESG-themed issuance is set to surpass USD3tn in the year 2022. But there are also challenges that need to be addressed. For example, investors are looking for more information on what constitutes an ESG fund. But there’s no recognized standard on how ESG scores are calculated. While efforts are underway to standardize ESG-specific metrics and formats, more is needed. At the same time, transparency over data is key. Firms that can quantify and standardize their ESG data are better able to drive their ESG initiatives forward. Likewise, it’s becoming increasingly clear that regulation will drive the need for greater transparency from firms. Businesses will also continue to look for ways to capture metrics so that they can present an accurate ESG story to their clients and investors.
We’ll handle the technology so you can concentrate on what you do best
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Every business will face challenges in 2023 but solutions and help are available. Only you can judge what your firm’s top priorities are, but there are ways of addressing them with advanced technology which will help you in 2023 and beyond. We all need to stay flexible and adapt quickly to changes and disruptions while maintaining client satisfaction. FIS can help you focus on improving what you do best – just leave the tech to us.
DON’T SHY AWAY FROM THE CHALLENGES IN 2023
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About FIS
FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our more than 55,000 people are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor’s 500® Index.
Chief risk officer Major insurance company
The accommodation of large data sets, highly demanding algorithms and the hardware for instant computational resources make the cloud ideal for large-scale data analysis.
Rise above your operational challenges
Deliver speed and scale
Save time
Eliminate risk
Things are looking up. But there’s more than one kind of cloud service to consider.
The good news is that if you’re outgrowing your traditional, on-premise IT setup, you can easily remove many of its costs, risks and limitations by moving your insurance risk management platform to a managed cloud service. Imagine the ability to deliver both speed and scale in an elastic actuarial modeling environment you can bend to your will. Factor in the move from capex to opex, which will instantly reduce your total cost of ownership. And with software delivered straight from the cloud to the desktop, you’ll save tremendous time and risk by handing every aspect of complex modeling technology to an expert provider.
Managed cloud services give you the power and scalability of a sophisticated actuarial modeling and risk management platform, but reduce the challenges, costs and risks of provisioning infrastructure and managing the underlying IT.
Hand every aspect of complex modeling technology to an expert provider and you'll reep the benefits:
Get your head around the cloud
30%
43%
David Elliott Architecture manager for financial services, Amazon Web Services
For insurers, the question isn’t "if" (they will migrate existing applications to the cloud) – it’s how fast they can move and what are they going to move first?
Are you ready to join the highest flyers?
According to FIS’ research, 43 percent of the fastest-growing insurance companies have migrated one or more mission-critical applications to the public cloud, compared to just 30 percent of the rest of the industry.
As an insurance risk manager, where do you stand on the cloud?
If moving your IT infrastructure off premise strikes you as an exciting operational opportunity, then full marks for a pioneering spirit. But if the cloud sounds like a risk too far, you won’t be alone in thinking twice about making the switch. It’s fair to say that insurers have traditionally taken a conservative approach to technology. However, times are changing – and faced with a growing range of challenges, more insurance risk teams in particular are putting their reservations to one side and discovering the limitless potential of the cloud for actuarial modeling and risk management.
But beyond lockdown conditions, there are more reasons than ever to run your organization’s most powerful systems in the cloud.
In 2020, unprecedented global circumstances have shown us all the benefits of hosted IT for business continuity and remote working.
