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Capital Markets Tech
Overview
Capital markets tech encompasses a range of technologies and solutions to enhance the efficiency, transparency, and functionality of financial markets. Startups in this space leverage technologies such as AI, Natural Language Processing (NLP), and blockchain technology to reshape how financial transactions are executed, how data is managed and analyzed, and how regulatory compliance is achieved.
There is a growing demand for market intelligence platforms that offer sophisticated analytics and advanced trading infrastructure capable of managing various asset classes and strategies. This, coupled with evolving compliance solutions to adhere to regulatory requirements, has fueled demand for capital markets tech. However, growth in the industry may be hindered by concerns over data security and data privacy in addition to ambiguity relating to regulations surrounding the use of technology in capital markets.
Industry Updates
Use cases
Many startups provide advanced technology solutions, including AI and machine learning tools, to assist financial institutions such as investment banks, asset managers, and hedge funds to improve their market intelligence, risk management, and compliance processes.
The primary use cases of these solutions involve improving decision-making, investment selection, and risk management by offering real-time insights, automated prediction models, and streamlined data analysis. They support compliance tasks like KYC, AML, and regulatory reporting while automating processes such as client onboarding, transaction handling, and reconciliation. Furthermore, customized client screening tools enhance operational efficiency by reducing manual tasks while minimizing errors.
We have identified key capital markets tech use cases below:
Market Mapping
Companies disrupting the capital markets tech landscape are engaged in all six major segments, where most activity across incumbents and disruptors is concentrated in market intelligence, trading infrastructure, and risk and regulatory compliance, which account for the lion's share of funding and have the highest number of incumbents and disruptors. Startups like 9fin and Sedric.ai offer solutions using advanced technologies such as AI, machine learning, and natural language processing to transform extensive and diverse datasets into valuable, actionable insights. A significant amount of funding was also diverted to companies offering trading infrastructure. Popular incumbents like LSEG and S&P dominate this market, given their vast industry experience and knowledge. Meanwhile, startups like Trumid improve credit trading by combining advanced technology and market insights in a user-friendly platform with multiple trading solutions.
Startups are increasingly focused on developing regulatory, risk management, and compliance solutions for capital market participants. Similarly, Quantexa offers tools to help businesses comply with anti-money laundering regulations and perform identity verification, like KYC checks, tackling significant data management challenges. The blockchain-based segment has the lowest activity level, as it is still an emerging technology with limited use cases.
Market intelligence platforms
Trading infrastructure
Risk and regulatory compliance
AML/KYC platforms
Blockchain-based workflow automation
GenAI-based Capital Markets Tech
The Disruptors
Most new entrants in the industry focus on providing solutions for market intelligence platforms and trading infrastructure. AlphaSense is the highest-funded startup in the capital markets tech space. It delivers market insights from a wide range of public and private content, helping businesses make informed decisions with AI, machine learning, and natural language processing technologies.
Trading infrastructure solutions are mostly dominated by incumbents, given the significant capital investment needed to develop trading platforms, mobile apps, and other trading solutions. However, smaller firms like Telum are emerging, offering innovative cloud-based infrastructure for alternative assets and private securities, creating a competitive landscape against these larger players. Disruptors like Nitrogen offer risk management solutions for market participants through API-based risk number analytics, while startups such as Corlytics use machine learning and AI to automate identifying, interpreting, and implementing regulatory changes. Additionally, companies like Rogo provide GenAI-based solutions tailored to the specific needs of global hedge funds, investment banks, and private equity firms.
Funding History
Competitive Analysis
Incumbents
Major players such as Bloomberg, S&P and Nasdaq hold significant influence in the market intelligence and trading infrastructure segments. Bloomberg has developed its namesake platform (Bloomberg Intelligence) in-house and is estimated to account for a third of the market intelligence platforms industry. S&P has grown its reach through acquisitions and partnerships, opting not to develop solutions internally due to high costs and complexity. Nasdaq, on the other hand, uses both in-house development and acquisitions to strengthen its offerings.
Other established players like Moody’s Analytics and Diligent, which provide risk and regulatory compliance services for capital market participants, have developed new AI-based solutions. For instance, Diligent introduced an AI-powered platform aimed at improving risk management by focusing on risk disclosure and regulatory compliance mapping. Additionally, these firms are actively acquiring other compliance companies to expand their offerings and minimize compliance risk for financial institutions.
However, incumbents have a more limited presence in areas like AML/KYC platforms, where smaller, innovative companies are addressing identity verification requirements using technologies like AI and natural language processing.
Notable Investors
