Rewriting the code for capital markets

Game-changing tech is bringing cloud-based capital, advanced artificial intelligence, machine learning and microsecond options that deliver better outcomes to the deal ecosystem.


7 minute read

Key takeaways

  • Transformation calls for diligence, discipline and prioritization, starting with existing technologies that drive automation and digitization.
  • Better, smarter, faster data, AI and predictive analytics will improve the deal-making process and effectively operationalize intuition.
  • Blockchain technology can enable capital markets to move to a decentralized ecosystem, eliminating central clearing and central counterparties and enabling instantaneous settlement.

Waiting for an “Amazon moment”

Technology has the potential to transform the traditional capital markets — driving a faster, smarter process, successful data-based outcomes and, ultimately, more value for clients — and Bank of America is striving to be the architect of that moment.


“Every business, in our view, has had or will have an ‘Amazon moment,’” says BofA Securities’ Elif Bilgi Zapparoli. “Capital markets have not had that ‘Amazon moment’ yet.”


As Co-head of Global Capital Markets, Zapparoli is a leader of the digital charge. “For us, the real strategic question is, ‘What does it take to be as relevant 10 years from now as it is today?’” she says. “The answer is, ‘What will the business look like?’ And there’s just one answer to that — technology.” Zapparoli believes there are three key areas where technology can transform, and has begun to transform, the capital markets. Bank of America is addressing these with internal initiatives, strategic investments and industry partnerships.

“Every business, in our view, has had or will have an ‘Amazon moment.’ Capital markets have not had that ‘Amazon moment’ yet.”

Dialing up digitization, accessibility and AI


First up, Zapparoli says, is using existing technologies to drive automation and digitization. “This is diligence. This is discipline. This is prioritization,” she adds. “This is knowing every business that we do, front to back, and how it can be improved.”


Many initiatives are client-facing, designed to make data more organized and accessible and processes faster and smarter. In early 2022, for instance, Bank of America joined the lineup of global partners and investors in Capital Markets Gateway, an equity capital markets platform that directly connects buy- and sell-side participants in real time, with centralized, standardized communication and access to information.


Similarly, Bank of America has partnered with Citigroup, JPMorgan Chase & Co. and Credit Suisse to develop a new platform for the syndicated loan market that allows lenders to access portfolio data in one place. The new portal, scheduled to be launched this year and called Versana, is designed to digitize the loan space and eliminate paperwork, like payment notices and rate resets, that are oſten handled manually.


Existing AI technologies also are being deployed to improve deals. Launched in 2018, Bank of America’s PRIAM uses AI to comb through its databases and predict which clients may be interested in specific deals, based on their record and past history. The goal is to improve deal-making by identifying investors and opportunities, then connecting them with each other. Think of it as operationalizing intuition. PRIAM 2.0, the second generation designed to take the experience to the next level with even more functionality, is set to debut in 2022.


These big initiatives will work alongside the continued digitization of more routine functions and tasks. According to an Accenture survey, 90% of respondents say that within five years, virtual assistants will handle more than half of customer interactions. Similarly, Zapparoli says her vision is relationship managers augmented with all of the data about all of the clients in their respective coverage areas and industries, leaving them enabled and armed to strategically focus more deeply on customers with even greater accuracy. In that scenario, everyone wins.

Graphic showing 90% of people surveyed thought virtual assistants will handle more than 50% of customer interactions within five years

Leveraging better, smarter, faster data


Technology can have a major impact on the capital markets through more extensive use of existing treasure troves of data in decision-making. Tools like PRIAM, for instance, can provide fast and accurate data on client preferences and history. But, Zapparoli says, “Although we talk a lot about data, the reality is we rarely make decisions based on it. We use data still for presentation purposes. So how do we go to a state where it defines decision-making?”

She says optimizing the use of data will require a culture change in the markets. “We have very experienced people who have references, and then we all make decisions based on that—and then of course we feed in data. But it's not that oſten that data changes the direction,” she says. “What I'm talking about here is: Can we go to a stage where we almost leave our experiences aside and can just start with data?”


Blockchain sets the stage for secure, real-time settlements


Zapparoli sees broad potential for blockchain technology to enable the capital markets to move to a decentralized ecosystem—one that’s faster, safer and more efficient. Don’t think of all cryptocurrencies as being like Bitcoin; although cryptocurrencies get all the headlines, using blockchain technology as a way to create a permanent, unalterable, secure digital ledger is how more people will use these applications in more situations. Zapparoli thinks it will change a lot of the way transactions are handled in the future.


She explains it like this: “In a blockchain world, you can turn everything into a token and you can put the tokens on a chain. Then you have no need for central clearing and central counterparties because the smart contract will have all the information on that chain. All the counterparties to the transaction will be able to communicate with each other via the chain via their addresses, so you have instantaneous settlement. You do not have any counterparty risk. You don’t have to think about currency changes. You can have interest payments that are, again, automatic. That’s a very different world than the one we live in, and it's a very real example of how technology can transform the way we do things.”


Capital markets participants agree with Zapparoli. In a recent Accenture survey, 87% of respondents said that in the future, most B2B transactions will take place on a blockchain.

Pie chart showing 87% of people surveyed believe most B2B transactions will be on a blockchain in the future

Game-changing tech can deliver on purpose-driven goals


Zapparoli believes that technology is capable of empowering us all. When it comes to financial markets, the efforts she describes are ultimately designed to make them work more effectively for everyone. She says, “At Bank of America, our CEO defines our purpose: to help make financial lives better, through the power of every connection. In our view, this is an execution aspect of that philosophy. What we’re talking about here is technology as a conduit to making it better. Again, the results are more favorable, more cost-effective, more value-added, and that's why, big picture, we think everyone needs to pay attention to that.”

Elif Bilgi Zapparoli | Co-head of Global Capital Markets, BofA Securities

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