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Leaders took the stage at the Nasdaq Financial Technology Conference
When industry leaders gathered in London this past June for a Nasdaq-hosted financial technology conference, complexity was at the top of the agenda.
Financial institutions are grappling with unprecedented complexity in today’s environment. Organizations are continuously faced with a flood of new regulations, technologies, products, and market changes — forces that many legacy systems weren’t built to handle. When companies try to patch their systems piecemeal to address those changes, it often leads to complicated operations and skyrocketing costs. Today, leading organizations are finding ways to turn this complexity into a strategic opportunity for improvement, using technologies like Nasdaq Calypso.
Nasdaq and BCG partnered on a report, and found that, over the past half-century, complexity in the wider operating environment for businesses had increased sixfold while organizational complicatedness had increased 35-fold over the same period. Today’s institutions are navigating an environment that is increasingly complex, dynamic and multifaceted. In trying to manage external complexity, though, organizations have created internal complicatedness defined by siloed systems and data, manual processes, legacy infrastructure, and fragmented decision-making.
Following the Financial Technolgy Conference in London, Nasdaq sat down with several banks within the financial ecosystem who are navigating complexity to discuss how they are partnering with Nasdaq to reduce complicatedness within their organizations by leveraging Nasdaq Calypso.
Nasdaq’s Valerie Bannert-Thurner Discussing the Future of Financial Technology
The Challenge of Internal Complexity
Internal complicatedness costs money and time, draining crucial business resources.
Tobias Wuergler, Managing Director and Partner at BCG, put that cost between $25 billion and $50 billion in risk and compliance alone. That’s up to $1 trillion in foregone additional lending capacity being redirected to overlapping, complicated systems that are trying — and failing — to keep up with an evolving world. Instead of playing “whack-a-mole” with new challenges as they arise, Wuergler argued that banks now have an opportunity to holistically rethink their operations from the ground up.
“The most effective way to address internal complicatedness without reducing control and increasing risks is to work in a systems-based approach, leveraging new technologies like cloud, generative AI, new software and workflow solutions, rethinking processes and overhauling approaches,” said Wuergler on the sidelines of the financial technology conference in London.
That’s exactly what Swedish multinational banking group Swedbank AB, and leading Central & Eastern European financial services provider Erste Group Bank AG did.
Previously, Swedbank had what senior executive Yohannes Negishi described as “a very scattered system landscape, with several front-office and back-office systems.” That also presented issues with both understanding costs and keeping track of data lineage. “With so many systems, it was difficult to understand where data actually came from,” he explained.
Similarly, Erste Group Head of Securities Servicing and Solutions Wilhelm Brad described the bank’s biggest problem as “a very fragmented system landscape,” leading to reconciliation issues and investigations.”
Addressing Complexity
Enter Nasdaq Calypso.
Calypso helps companies consolidate their platforms, replacing fragmented, siloed systems with integrated, one-stop-shops. The platform integrates front-, middle-, and back-office solutions to streamline and simplify operations from end-to-end, incorporating centralized data, trade management, risk analytics, compliance and reporting to enable firms to thrive in an ever-changing reform and regulatory environment. It improves data consistency, simplifies workflows, and lowers maintenance costs.
Swedbank’s partnership with Nasdaq and use of Calypso has allowed it to break down its silos and thereby reduce operational costs and risks at the same time. It also has the potential to unlock new AI capabilities, allowing Swedbank to reliably analyze and extract valuable insights from large data sets without having to traverse across multiple platforms.
For Erste Group, aside from helping the bank streamline operations and become more efficient, Calypso has helped drastically reduce time-to-market for new financial instruments — all in one unified platform.
According to Brad, Erste Group has also been able to incorporate AI into customer communication and automated pricing, helping them use their resources as efficiently as possible and deliver for their clients.
The Power of the Cloud
In addition to supporting institutions as they combine multiple systems into one, Nasdaq Calypso also empowers companies to embrace cloud technology to overcome complicatedness and respond to external complexity with more agility and greater speed.
Mauritius Commercial Bank (MCB), the oldest and largest banking institution in the country, upgraded its Calypso platform and partnered with Nasdaq to host it on Nasdaq’s managed cloud service. That move allowed the bank to “focus on our core competencies” while leaving the technical challenges to Nasdaq, according to senior MCB official Ally Musaphur.
MCB has used Calypso, Musaphur said, to extend Financial Market Capabilities and product coverage, helping it grow and attract off-borders revenue. The partnership, established over an 18-month migration, has also allowed MCB to seamlessly incorporate Nasdaq-powered Calypso upgrades throughout its operations, ensuring the bank is always using the latest technology without any extra effort.
Those upgrades are a result of the tight partnerships Nasdaq has with fintech firms like MoCaX Intelligence to enhance its platforms. Nasdaq drew on MoCaX’s advanced modelling expertise to integrate an AI-driven XVA Accelerator into Calypso, helping clients handle complicated and time-consuming risk computations quickly, thoroughly, and safely.
Furthermore, with all the relevant data localized within one ecosystem, clients can easily put those kinds of AI tools to work, instead of having to sift through data in disparate systems to enable innovation. Cloud adoption and partnerships amplify the benefits of a unified platform, making transformation faster and more effective.
Driving Results
This holistic, system-wide approach to complexity delivers across-the-board results for Calypso users.
- Cutting costs by enhancing efficiency: Swedbank and Erste now maintain fewer systems, cutting IT overhead and reducing errors. MCB expects a lower total cost of ownership by using Nasdaq cloud services.
- Enabling innovation at scale, with speed: Because they’ve simplified the foundation and consolidated their systems, these banks can introduce new products or services faster. Swedbank, Erste, and MCB have all been able to accelerate new feature rollouts, scale business faster, and otherwise embrace new opportunities because they have a stable, coherent foundation to build upon.
- Simplifying risk management: With data consolidated in one easy-to-navigate system, risk teams have a clearer, real-time view of exposures. Compliance reporting is more straightforward, and cloud-based services are continuously monitored, updated, and able to handle surges in activity.
- Focusing team time on clients: With Calypso simplifying internal operations, Swedbank, Erste, and MCB have all been able to rededicate resources to what they’re in business to do: to serve their clients. Quicker trade settlements or faster time-to-market for new offerings ultimately benefit customers and partners.
Looking Ahead
Beyond the short- and medium-term results that Calypso has already delivered, it is also setting users up for the AI-enabled financial world of the future. With clean, consolidated data and systems, banks can deploy machine learning models much more effectively — otherwise, AI would be trying to operate across messy, siloed data. Now that they have brought additional order to a complex operational environment, they are well positioned to capitalize on AI to find patterns, predict issues, and customize services.
With Nasdaq Calypso, firms can operate confidently in a complex financial ecosystem. With the right strategy and technologies — consolidating onto modern platforms, embracing cloud and partnerships, and gearing up for AI — companies can simplify their operations and even turn complexity into a competitive advantage.
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