Capital markets firms are under growing pressure to improve efficiency as trade volumes rise and regulatory demands multiply. While many prioritise the enhancement of customer-facing technology and front-end systems modernisation, the toughest hurdles lie beneath the surface, within fragmented and manual middle and back-office processes.
A recent global study conducted by Coalition Greenwich describes how genuine transformation can only succeed with an end-to-end approach. Without modernising essential processes, such as data ingestion and exception management, digital initiatives will struggle to scale and generate sustainable business value.
The research offers a clear snapshot of where the industry stands in terms of automation and AI adoption, and the barriers still blocking progress.
Efficiency remains a key differentiator
Operational efficiency remains the primary driver for digital transformation, cited by nearly 90% of Greenwich Coalition’s survey respondents. While this is hardly surprising given the squeeze on margins and increasing compliance demands, what stands out is how elusive these efficiency gains remain in practice.
The study reveals that legacy infrastructure and disconnected processes are major blockers, with the former continuing to hobble digital transformation efforts. As such, 57% of firms are investing in (or plan to invest in) data and workflow improvements over the next 12 months. Especially in the middle and back-office, where manual, error-prone workflows remain a persistent feature.
The price of standing still
While digital transformation carries upfront costs, these are dwarfed by the hidden cost of maintaining the status quo. Left unaddressed, both legacy systems and manual processes become speed bumps on the road to fast, future-ready, automated financial services.
Yet according to the report, 62% of respondents still manually process up to a quarter of their data. Critical areas such as regulatory reporting (80%), client onboarding (79%), and reconciliations (77%) are among those tasks most heavily reliant on manual intervention. As well as delaying processes and ramping up the risk of errors, the need for manual intervention tethers skilled teams to low-value remediation tasks.
Respondents reported spending hours resolving exceptions, inviting financial and compliance risks, and leaving less time for strategic initiatives. According to the study, firms also allocate up to 5% of annual capital to cover remediation costs, thwarting profitability and opening the doors to regulatory scrutiny.
Data as a catalyst and a constraint
One of the report’s central themes is that data is both the engine and the obstacle for automation. Encouragingly, almost 60% of firms have taken steps to improve data capture, with more planning to follow suit throughout 2025 and beyond.
Across front, middle, and back-office functions, firms are focusing on tools that improve data capture and transformation, recognising that legacy systems cannot handle today’s data demands alone. Automation and AI are essential to managing this data deluge.
AI adoption gains cautious traction
AI usage is beginning to gain traction within capital markets operations, with one in three (33%) firms reporting that they use AI in some capacity. A further 23% expect to implement it within the next 12 months, with common applications including data enrichment, workflow automation, and exception handling.
Despite its promise and initial uptake, the industry approach to AI adoption remains tentative. While 60% of firms view AI as critical to their transformation strategies, a third remain sceptical about its ability to deliver immediate results, particularly in the absence of clean, structured data.
Firms increasingly understand that AI needs solid data foundations and clearly defined processes to deliver real value. This recognition supports the argument that tackling middle and back-office automation should come first, before layering on more advanced technologies.
The problem with point solutions
The data also points to an over-reliance on point solutions, with many firms using up to five platforms to manage operations across asset classes. While these tools solve isolated problems, they introduce new issues of their own, from fragmented data and inconsistent workflows to heavier integration overheads.
As the report states, “The abundance of point solutions has created a landscape rich in tools but lacking in cohesion or agility.” Respondents consistently identified the need for a unified automation strategy that connects data flows across the entire trade lifecycle and integrates front, middle, and back-office functions.
The roadmap to modernisation
The Coalition Greenwich research identifies three priority areas for firms looking to advance their automation journeys. First, tostandardise and consolidate data at the source: Manual data remains the biggest blocker to meaningful automation. Second, to invest in infrastructure that supports integration: Legacy systems unable to connect with modern APIs create bottlenecks that must be addressed. Thirdly, to focus on middle- and back-office processes: These are some of the least automated areas yet carry considerable costs and risks.
Next-generation data automation platforms are helping firms address these challenges by automating data ingestion, transformation, and exception handling. With no need for wholesale system overhauls, they enable incremental modernisation of core operations while preserving continuity.
Bridging the automation gap
As the Coalition Greenwich research notes: “The front office may capture attention, but the back office determines whether transformation delivers tangible results.”
For firms that have spent the past decade enhancing client-facing platforms, the time has come to complete the transformation journey. Efficiency was once a byword for speed. Today, it encapsulates resilience and the agility to respond to constant market shifts.
In the absence of a strong automation layer running beneath the surface, digital transformation is fated to exist as little more than a costly promise instead of what it should be, an achievable and essential business destination.