Trends Identified
Globalisation of Financial Resources
The financial networks and communication systems that manage the world’s critical resources are increasingly intertwined. The interconnected world creates greater opportunity for better management of global resources; it may also provide incentives for co-operation and multilateral approaches in addressing global issues. However, vulnerability to exploitation by non-state actors, ranging from international criminal networks to cyber criminals and terrorists, will increase. Attackers could target banking and financial institutions or communication systems. Additionally, as nations become increasingly interdependent, a negative economic event in one country could well be compounded globally as it spreads quickly to other markets.
2013
Strategic Foresight Analysis 2013 Report
NATO
Increased Resource Scarcity
Nations need increasing amounts of energy and raw materials to sustain growth and maintain an advantage in the globalised economy. Limited natural resources, supply vulnerabilities, and the uneven distribution of energy and resources increase the potential for conflict between importers, exporters and transit countries, particularly in politically unstable regions. Any nation that holds considerable oil, natural gas reserves or deposits of rare earth elements and other strategic materials43 might leverage its position both for political and economic purposes.
2013
Strategic Foresight Analysis 2013 Report
NATO
Decreasing Defence Expenditures
Governments faced with slow or non-existent growth, rising unemployment and increasing debt burdens will continue to have many competing priorities. Continuing volatility in financial markets might further slow global as well as national economic activity. Defence spending has continued to decline across the Alliance due to reduced economic growth, and the increasing emphasis on social programmes. There is a risk that, even if economic cycles turn more positive, public opinion may prevent some nations from reinvesting in defence. This will have a marked negative impact on defence capabilities in the future. The consequences of current and anticipated near-term reductions in Science and Technology (S&T) investment will have implications on longer-term force capabilities. These deficits could be offset by new, less expensive, and yet-to-be-developed technologies.
2013
Strategic Foresight Analysis 2013 Report
NATO
Environmental / Climate Change
Global environmental change and its impacts are becoming readily apparent and are projected to increase in the future. In some areas these changes could present benefits, such as less energy requirements for heating, longer growing seasons that allow increased agricultural production, and the opening of the Arctic for resource exploration and shipping traffic. However, these benefits are likely to be offset by negative effects elsewhere, including coastal inundation, desertification, deforestation and other ecological effects that will have a direct impact on the world’s fresh water and food. Water stress is expected to be the most inevitable near-term impact of climate change.49
2013
Strategic Foresight Analysis 2013 Report
NATO
Natural Disasters
The effects of natural disasters will become more devastating. Natural disasters (e.g. earthquakes, tsunamis, volcanic eruptions, meteor strikes) will occur with devastating impacts on humanity. Increased population and infrastructure in disaster prone areas will magnify the consequences of these natural disasters.
2013
Strategic Foresight Analysis 2013 Report
NATO
Technologies are converging across multiple industries
"The financial services industry pioneered technology that enables very high speed marketplaces and machine-to-machine communications. Some of these technologies are now being applied in other industries as well as in non-financial markets everywhere. Take general-purpose time series databases and Field Programmable Gate Array (FPGA), software embedded on hardware to allow a much more deterministic speed, as examples. These technologies have been essential to financial services firms for some time. Now cloud providers are deploying both, and automakers are using FPGA within their vehicle systems. Simultaneously, the financial services industry is looking at how other industries are leveraging technology to increase efficiency, reduce risk, improve customer service and gain competitive advantage. To illustrate, the Internet of Things (IoT) is taking machine-to-machine communications to the next level in many areas including agriculture and supply chain management. GPUs used in gaming are enabling machine learning, which is being applied across all industries. Financial firms are moving away from technology islands and leveraging technology architectures and designs in their core infrastructure that are similar to those used in other industries. Examples include distributed global connectivity solutions used in telecommunications, and global networks and platforms that have been within the purview of Google and Facebook. Tech convergence is all about applying technology in creative ways to solve problems, accelerate innovation and meet customer needs. Nasdaq is working constantly to spot new trends and exploring opportunities to adopt new technologies where appropriate. "
2019
NASDAQ DECODES: TECH TRENDS 2019 -The technology trends that are driving the world of markets forward
Nasdaq
Open source is enabling community problem solving and differentiation
Often a problem is widely experienced by many different firms. Instead of solving it individually and sub-optimally, it makes sense to band together and solve it as a community. The open source model enables companies to tap into a community dedicated to building modern software, and to align with vibrant, active projects. As such, companies can accelerate innovation on the differentiating parts of their platform while leveraging the underlying foundational innovation of the broader open source community. The open source model lowers costs and in some cases achieves vendor independence. Notably, the cloud providers’ embrace of open source is leading to lower cost for additive cloud services as well as more robust competition. Open source also helps to attract the next generation of talent, who want to work on cutting-edge projects and have a positive impact on the world. Linux, an open source solution that modernized and replaced an outdated alternative, is a great success story. But not all projects achieve that level of success, and it is important to identify which ones are likely to remain vibrant and viable. One indicator is when the founders remain involved and the project is growing, as in the case of Confluent and Databricks with Apache Spark and Apache Kafka. Another positive sign is when open source projects are widely adopted across the major cloud providers, such as Docker and Apache Spark. Perhaps one misperception is that the acquisition risk is lower with open source technology. IBM bought Red Hat recently, and VMWare bought Heptio. As a result, companies that have decided to migrate toward an open source technology may find themselves bound to a large incumbent vendor once again. If this trend continues, the full benefits of tapping into open source may not be long-lasting. Moreover, some new license frameworks prohibit companies from reselling what they have built on open source. Given these trends, Nasdaq plans to contribute to a select group in the open source community. In particular, open source makes it easier for exchange customers to access data and derive insights from it in real time. If market participants handle data in a common way and with a common set of tools, individual firms do not have to devote resources to building those tools. Importantly, data can be shared in a way that does not compromise security and integrity to the benefit of all.
2019
NASDAQ DECODES: TECH TRENDS 2019 -The technology trends that are driving the world of markets forward
Nasdaq
Innovation in the cloud is prolific
Innovation in cloud product offerings has been prolific as cloud providers compete to gain market share. Two significant advances over the past year are the integration of time series databases and the introduction of parallel streaming in milliseconds, giving companies a comprehensive view of activity like never before. Specifically, Apache Spark is a fast, in-memory data processing engine with development APIs to allow data workers to efficiently execute streaming, machine learning or SQL workloads that require fast, iterative access to datasets. Apache Kafka is a community distributed streaming platform capable of handling trillions of events per day. Both technologies are available in the cloud, and will be foundational for next generation surveillance, risk management and generally keeping up with the high-speed information on trading and clearing systems. It is notable that the cloud providers are embracing and supporting open source alternatives in addition to the enterprise software and proprietary solutions that are available currently. Importantly, customers are benefitting in terms of better availability and cost effectiveness of product. Some cloud providers have conceived of products that extend their offering to the customer’s premises. Other offerings allow large customers with many accounts the ability to give their employees autonomy while still maintaining control. Regulatory compliance is a key consideration for companies, and concerns about data residency are driving some global players toward a true multi-cloud offering. One implication of GDPR, for example, is that companies may not be willing to cross borders with their products and data if a cloud provider has not built out in Europe and in the company’s region. In many firms, the multi-cloud strategy is still taking shape, and the fear of traditional vendor lock-in is ever present. That said, open source foundational technologies as well as emerging ones such as Apache Kafka may be adopted across all major cloud providers. For now, firms appear to be adopting the leading cloud provider in their region plus a second one, but the right cloud strategy is a matter of perspective. For technology providers, having a multi-cloud strategy is important for product distribution and customer reach. Many financial firms, however, are still operating in a hybrid cloud mode, focusing on connecting to one cloud provider as well as their own data centers. Nasdaq will continue to monitor progress in this area.
2019
NASDAQ DECODES: TECH TRENDS 2019 -The technology trends that are driving the world of markets forward
Nasdaq
Alternative data, machine learning and artificial intelligence are a powerful combination
Enterprises need to become data driven to succeed in the current business environment. The ability to make both structured, unstructured and alternative datasets actionable can be a significant differentiator. In some cases it is necessary just to stay relevant. This is true across all industries, including finance. Traditionally, investor analysis involved looking at a company’s 10Ks and 10Qs, market data and the technical analysis of the trading activity. Nowadays, investors see an opportunity to use alternative datasets from sources such as Quandl to make better decisions. For example, they might look at month-over-month sales and compare those figures to the company’s peer group, and track the company’s supply chain for insight into future production flows, sales and sources of risk. Clearly, alternative datasets, analytics, and machine learning/ artificial intelligence (AI) are a powerful combination. The advancements in AI are coming rapidly. New techniques such as reinforcement learning as well as generative adversarial networks (GANs), which are a type of deep learning neural network, are starting to attract attention. They are also extending capabilities beyond what was possible with standard machine learning and deep learning algorithms. GANs for instance will allow AI to compete with itself to come up with an optimal model in real time, resulting in greater accuracy. A potential application is in risk management. All these technology enhancements have not brought us much closer to having a generalized AI (capable of super-humanlike intelligence across any subject). However, companies are achieving success by focusing on narrow AI applications where an algorithm can be trained to do one thing extremely well, surpassing the capabilities of what a human could do on their own. Financial firms are doing this to detect spoofing behavior or risky trading activity. For example, they use these narrow AI algorithms to build applications that are much more sophisticated and accurate than their traditional counterparts. Generalized AI – the ability for a machine to successfully perform any intellectual task that a human being can – is still about a decade away. Yet it is becoming easier to interact with Siri, Alexa and Google Assistant, and every question people ask is another narrow AI application. Before long, it will be possible to put together millions of questions and answers, drawing us farther down the path to generalized AI – especially as the technology improves.Until then, the greatest opportunity and challenge is knowing the right narrow AI applications to develop. Commercial success is dependent on having a clear understanding of how, when and why people will use something new rather than relying on their tried and tested human intelligence. Behavioral science methods are becoming recognized as the differentiator to deliver this understanding, and the way forward could be through “collaborative intelligence”, involving a reimagining of people and machines working together. Achieving this requires behavioral scientists to do a new depth of analysis of clients’ cognitive and manual working processes. This ensures the best of human and machine capabilities can be leveraged to deliver this new way of working. In the meantime, Nasdaq’s strategy is to build a community of data suppliers and connect them with a community of data consumers, and then provide the services they need to make the data actionable. As we build up our data repositories, and we connect them to Nasdaq Financial Framework, those datasets and technologies will become available to an array of market participants.
2019
NASDAQ DECODES: TECH TRENDS 2019 -The technology trends that are driving the world of markets forward
Nasdaq
Blockchain projects produce early results
Many financial institutions and blockchain/ distributed ledger technology labs have been working on proof of concept (PoC) and pilot projects, and some are starting to produce early results. A goal of this work is for parties to form consortia and set up commercial networks on shared infrastructure based on the blockchain. Multiple blockchain technologies are now emerging with different implementations and consensus algorithms. As certain projects may require interoperability between these different implementations, Nasdaq recently completed a PoC with the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS) demonstrating cross-blockchain settlement. This indicates that blockchain can provide a supporting role in the next generation CSD and the transfer of digital asset ownership. The emergence of different types of tokens is another trend. Some link directly to a fiat currency, while others are tokenized assets. In response, regulators worldwide are trying to build a legal framework for payment, security and utility tokens. Going forward, blockchain will likely be used as a solution for managing new types of financial and non-financial assets in markets everywhere – potentially including real estate, insurance and loyalty points. The token ecosystem will support the entire life cycle of the asset – from issuance and price discovery to execution and settlement, and perhaps corporate actions. Payments will either be done on the same network, via a link to an external payment network such as T2S or Swift, or via a utility settlement coin. Yet, some important questions remain unanswered. Who will take on the custodial aspects of dematerialized physical assets and digitized tokens on a blockchain, and manage know your customer and anti-money laundering compliance? The traditional custodians could assume that role, but disrupters could appear in markets that do not have custodians. Another question is who will be the arbitrator if and when a smart contract goes wrong? The smart contract hype cycle has nearly peaked, and the trough is about to begin. Technologists need to think about where smart contracts make sense and whether the programming languages should be Turing complete so they can run any program given enough time and memory. In the next few years, expect to see the major cloud providers supply the infrastructure for blockchain, and blockchain software companies consolidate as funding becomes more difficult.
2019
NASDAQ DECODES: TECH TRENDS 2019 -The technology trends that are driving the world of markets forward
Nasdaq