Emphasizing Technology Upgrades and Advancements
Modernising Legacy Technology in Capital Markets: A Necessary Shift
In the fast-paced world of capital markets, the importance of modern technology infrastructure cannot be overstated. However, many firms are still grappling with legacy systems that limit their flexibility and prevent them from taking advantage of new developments.
According to a report by the Financial Conduct Authority, these outdated systems pose a significant challenge. They hinder the agility of processes, making it difficult for firms to keep up with evolving regulations such as open banking mandates, real-time payments, and data privacy laws.
Moreover, fragmented data pipelines impede timely trade signal processing and decision-making, reducing responsiveness to market volatility. High costs and complexity of compliance management and reporting further exacerbate these issues due to manual and batch-oriented processes in legacy ETL and workflows.
Security vulnerabilities from outdated software architectures also pose a significant risk, increasing exposure to cyber threats. Competitive pressure from digital-native fintech firms offering rapid innovation cycles, personalized services, and seamless digital experiences further underscores the need for modernisation.
However, modernisation is not without its challenges. Deepak Dhayatker, CTO at Rapid Addition, suggests that IT systems, platforms, and databases built around the 2000s are inflexible in 2025. He warns that companies that don't invest in modernisation are slow to respond to business opportunities and industry disruptors.
Rapid Addition's whitepaper, Modernising at Scale: Re-Platforming Legacy Trading Infrastructure, outlines solutions to these challenges. Transitioning to cloud-native, microservices-based, and modular platforms offers flexibility, scalability, and easier integration with third-party services and legacy systems.
Employing AI, automation, and real-time data processing can accelerate trade lifecycle management and regulatory compliance. Platform-based approaches allow firms to modernise at their own pace, preserving business continuity by avoiding risky "lift-and-shift" or complete rewrites.
Investing in enhanced cybersecurity measures alongside modernisation is crucial to address vulnerabilities inherent in legacy systems.
The benefits of a modernised infrastructure are significant. Faster product innovation cycles and deployment of new features improve the ability to meet client expectations for personalised, timely services. Real-time regulatory reporting, risk monitoring, and audit readiness reduce compliance risks and associated costs.
Significant operational efficiencies, including up to 20% or more improvements through seamless integration and automation, translate into cost savings and faster market responsiveness. Greater scalability and performance enable smoother handling of trading volumes, and enhanced security posture reduces the risk of breaches and strengthens client trust.
Rodrigo Parrode, EVP and Chief Operating Officer at Wedbush Securities, emphasises that modernising legacy platforms is about reshaping how value is delivered to clients. Modernisation is essential for staying agile, scalable, and responsive in a complex market environment.
In summary, modernisation shifts capital markets firms from rigid, fragmented, and inefficient systems towards agile, integrated, and secure platforms that support compliance and innovation. This transformation is increasingly seen not just as a strategic benefit but as an essential imperative to remain competitive and compliant in a rapidly evolving financial landscape.
The rapid advancement in technology events continually challenges businesses in capital markets, with outdated legacy systems hindering their ability to adapt to new developments such as open banking mandates and data privacy laws.
Investing in modern technology infrastructure can deliver significant benefits, including faster product innovation cycles, improvements in regulatory compliance, substantial operational efficiencies, enhanced scalability, performance, and security, and strengthened client trust, ultimately making it crucial for staying competitive and compliant in the evolving financial landscape.
