Innovation drives progress, yet many capital markets firms find themselves stuck in old habits, hesitant to embrace new technology—even with the promise of greater efficiency, security, and resilience.
Why? It’s often a complex mix of cultural, technological, and operational concerns.
Yet, holding onto outdated practices is considered one of the most significant barriers to innovation, according to a report by Iress and Waters Technology, 5 Key Drivers Shaping the Future of Trading, based on insights from 38 global capital markets firms.
The overwhelming majority of firms surveyed believe a failure to implement the latest solutions inhibits progress.
The problem is that firms often find themselves caught between the need for innovation and the fear of disruption.
Trading firms thrive on stability with workflows built around familiar systems, processes, and software. So, even when outdated infrastructure slows them down, many still prefer to stick with the devil they know.
- “I don’t want to relearn everything” – Firms are comfortable with their current workflow. The idea of relearning processes, shortcuts, and navigation often feels like more trouble than it’s worth.
- “What if this upgrade causes problems?” – Previous system changes haven’t always gone smoothly. If an update has ever caused a major headache, scepticism is natural.
- “I know this old system has issues, but at least I can work around them” – With legacy systems, employees learn hacks and workarounds to make things function. A new system could break their workflow entirely.
- “Short-term efficiency matters more than long-term improvements” – Many firms focus on getting their job done today rather than thinking about long-term benefits of new solutions and upgrades.
While these fears are understandable, there’s a cost of standing still.
History is littered with examples of firms that failed to adapt and suffered the consequences. Industry giants like Kodak, Nokia, Sony, and Blackberry once dominated their markets but failed to anticipate and implement technological advancements.
In financial markets, firms that delay new solutions risk hindering growth by blunting competitiveness, threatening operational efficiency and introducing compliance risks.
Breaking the cycle
Change is inevitable, but for many trading firms, uncertainty holds them back. The fear of disruption, potential downtime, and unfamiliar workflows often outweigh the long-term benefits of modernisation. Yet, resisting change can be just as risky.
The solution? A smarter, more strategic approach to transition.
A gradual approach
Instead of overhauling entire systems overnight, firms can gradually integrate new technologies within familiar frameworks. This reduces the risk of operational disruptions while allowing employees to adjust at a manageable pace. For example, the rollout of the new Iress buy-side EMS (execution management system) leverages existing technology like the Iress Pro terminal while incorporating cloud-based enhancements. This allows firms to modernise and benefit from cloud-based enhancements that improve speed, security and resilience without disrupting current workflows.
Continuous testing and feedback
Another effective strategy is beta testing and continuous feedback loops. Smaller, more nimble firms often take advantage of beta versions of new platforms, providing valuable insights that shape product development. Larger institutions, while burdened with more complex and lumbering legacy systems, can adopt a similar mindset, introducing phased rollouts to allow teams to test updates before full-scale implementation.
A focus on flexibility
Cloud technology is also redefining flexibility, making upgrades more seamless. Traditional software installation often comes with logistical burdens – failed installers, compatibility issues and time-consuming patches. SaaS (software as a service) models eliminate these hurdles, offering instant updates, tighter security, and better resilience against market disruptions. The latest advancements from Iress, including self-healing applications, ensure that mission-critical systems remain available, reducing the risk of downtime.
One of the most potentially damaging threats of outdated infrastructure is the risk to valuable trading and customer data. Many firms spend more time reconciling fragmented datasets than analysing real-time insights. Our cloud-enabled data hubs solve this problem by ensuring seamless data-sharing across trading, risk, and compliance teams. By integrating systems, firms unlock real-time insights into liquidity, risk management, and smarter decision-making. Cloud platforms extract deeper value from data, consolidating fragmented datasets into a competitive advantage rather than a logistical headache.
The future of financial innovation
The markets are evolving at an unprecedented pace, becoming faster, more complex and more interconnected. Trends like the availability of trading 24 hours a day, the move to T+1 settlement and increasing regulatory scrutiny all demand greater responsiveness.
To remain competitive, firms must transition from rigid, monolithic systems to interoperable, cloud-native platforms that enable agility and innovation.
Future-proofing strategies include:
- Real-time data access – Providing firms with clean, structured data to optimise AI-driven decision-making.
- Open APIs & third-party integrations – using frameworks like FDC3 (Financial Desktop Connectivity and Collaboration Consortium) for seamless system interoperability.
- Zero-install infrastructure – Reducing friction by eliminating traditional installation requirements and shifting to browser-based applications.
- Interoperable desktops - Connecting proprietary and third-party tools, allowing traders to build workflows around how they actually operate.
At its core, innovation is about adaptation. Firms that embrace change will find themselves positioned for success, while those that hesitate risk falling behind. The choice is clear: evolve, modernise, and innovate—or be left in the past.
