The outlook for treasury and capital markets, Herve Carrere, CPO, Treasury & Capital Markets, Finastra

By Robin Amlot

Finastra and LPBank were awarded ‘Best Treasury Implementation’ and ‘Best Risk Management Implementation’ at the IBS Intelligence Global FinTech Innovation Awards 2024. Herve Carrere, CPO, Treasury & Capital Markets at Finastra reviews the key challenges currently facing the treasury and capital markets sector, and how Finastra is addressing them

“Volatility and change continue to significantly impact the sector,” said Carrere. “Whether fluctuating macroeconomic events, political turbulence or increasingly complex regulations, such as Basel IV, banks are navigating more uncertainty, risks and demands than ever before. For example, institutions face greater requirements for monitoring credit market and liquidity risk, and to comply with AML, KYC and sustainability disclosures, which often require new data sets and analytical frameworks. Capital markets firms are increasingly burdened by delayed trade validations, increased complexities in risk management and the growing demand to support an expanding array of sophisticated financial products.

“Banks have no choice but to modernise, as many legacy systems are not equipped to navigate this environment. Fragmented architecture, manual workflows and siloed systems lack the necessary agility to evolve with change and support near/ real-time access to information and reporting.

“Our solutions are designed to help banks stay ahead. Finastra Kondor, our leading bank treasury management solution, enables institutions to trade high volumes of treasury, complex derivatives and structured products, providing enhanced risk analytics, real-time position management and the ability to comply with evolving regulations. Our modular, cloud-native solution allowed LPBank to modernise its treasury management operations in record time – just 6 months. The success of this project showcases that modernisation does not have to be slow or risky, especially when delivered by experts.

“Additionally, by offering managed services in collaboration with our partners, such as DXC Luxoft and RightClick Solutions, banks gain further benefits in terms of operational efficiency and maintenance support. We’re also orchestrating an API-enabled ecosystem of FinTech partners that enables banks to seamlessly integrate new services, adapt with change and pursue new growth opportunities. Finally, by helping our customers adopt microservices-based architecture, we’re providing the option to select and integrate the specific functionalities they need, while minimizing the potential risks of large-scale system migrations.”

What are the most significant trends and innovations you are seeing in this space?

“AI is having a huge impact on the entire financial services industry. Finastra’s Financial Services State of the Nation survey 2024 found 61% of financial institutions recently adopted AI or improved their capabilities, twice as many as 2022 . Additionally, 35% recently adopted or improved generative AI (Gen AI) capabilities, up from 25% in 2023.

“By interpreting vast quantities of structured and unstructured data, Gen AI enables institutions to automate complex tasks, uncover new patterns, and enhance decision-making in real time. For example, for treasury and capital markets, it can run sophisticated stress tests, predict liquidity gaps, and assess capital adequacy under various market conditions. It can process signals from central bank policy announcements, global news feeds and social media sentiment to  forecast potential market shifts. Gen AI also empowers teams to quickly act on regulatory updates, generate tailored reports, and identify anomalous behavior across thousands of transactions. Agentic AI is taking this further, capable of autonomous task execution and complex problem-solving.

“Another trend is the growing demand for Islamic finance and treasury solutions that support this demand. Vision Bank, a Sharia-compliant, digital bank in Saudi Arabia, recently became fully operational on Kondor, which supports Islamic banking requirements. This is a good example of how institutions can modernise in a way that is both technologically progressive and culturally relevant. With Islamic finance-specific functionality embedded in a scalable, cloud-native platform, Vision Bank is better positioned to respond swiftly to regulatory changes while supporting its growth ambitions.”

How do you ensure your products stay competitive in a rapidly changing market?

“Evergreening is a critical part of our offering. This involves performing ongoing upgrades that ensure compliance with the latest regulations and industry demands, while utilising the latest technology for superior experiences. True evergreening is about more than just the latest software versions. It’s about delivering IT infrastructure that remains continuously up-to-date, secure and adaptable.

“We are supporting our clients in implementing and improving automated testing, so that they can upgrade without the complexity associated with deployment. By leveraging our partners’ expertise in client upgrades and test automation, as well as their deep knowledge of continuous integration and delivery deployments, we are streamlining the testing process. This approach enhances agility and ensures a smoother transition. Additionally, automated testing guarantees consistency with each upgrade by utilising a proven, repeatable process that eliminates variability and reduces risk. As a result, customers experience more reliable and predictable upgrades while maintaining high-quality performance.

“Another important aspect is enhancing our solutions through partnerships that complement our offerings. For example, through our partnership with CloudMargin, we have integrated its SaaSbased platform with our solutions to help institutions meet growing demands for collateral management and mitigate financial risk.”

What role does customer feedback play in your product development process?

“Customer-centricity plays a central role in the product development process at Finastra, and we constantly seek to understand how we can better support financial institutions. One way is through conducting customer surveys. We also regularly host regional, in-person user groups to gain further feedback and offer our support. We have mcreated a community in which solution users can support each other, with several customers organising user groups themselves. All this feedback is collated and utilised to inform the next product iteration and development process.”

How do you see the future of treasury and capital markets solutions evolving over the next 5-10 years?

“AI is already driving significant transformation in treasury and capital markets. From the trading floor to the back-office, AI systems help to increase efficiency, streamline complex tasks, and uncover valuable insights. Gen AI is at the forefront of this revolution, evolving from a supportive role to becoming an essential tool in banking operations.

“As AI continues to evolve and becomes increasingly autonomous, as is the case with agentic AI, the financial services industry will become even more automated, sophisticated and able to solve extremely complex problems. With the ability to independently perceive, reason, act, and learn, agentic AI can transform operations by rapidly processing data and increasing decision accuracy. Treasury and capital markets solutions could, for example, provide even quicker and more accurate insights into liquidity, positioning and risk, and make fast, informed decisions about trading activities or hedging strategies. This could prove invaluable for institutions as signs of global uncertainty and volatility show no signs of slowing down.”