Capital markets are entering a definitive new era of expansion. Opportunities are ripe, but as potential grows, so does complexity.
Oliver Wyman Partner Pete Clarke outlined the shifting tectonic plates of the financial landscape to our Innovation Day: New York audience.
His primary takeaway was one of striking contrast: while the sector is enjoying a period of record revenues and bullish growth, this opportunity is creating an unprecedented strain on legacy infrastructure.
The path to success in 2026 requires more than just capital; it requires a profound "re-piping" of the industry’s operating models.
Here are Clarke’s top insights on the sell-side, buy-side and market infrastructure. Click on the links below to jump to a section, or keep reading to get all the top takeaways.
Top trends for sell-side leaders
Key takeaways for market infrastructure providers
Top sell-side trends leaders should know
The sell-side is riding high on record revenues, strong performance across financial products, and a loosening regulatory environment. However, the landscape for 2026 is becoming increasingly nuanced.
Today’s leaders are navigating a unique challenge: a more permissive capital environment coupled with unprecedented operational and data demands. The strategic playbook is being rewritten in real-time as regulatory philosophies shift and foreign and regional competitors “double down”.
Firms are focussing on mastering operational complexity as acquisitions and the integration of digital assets add new challenges.
Here are the five key trends shaping the sell-side trajectory for the year ahead.
1. The 2026 outlook is bullish
The sell-side experienced a bumper year in 2025. Industry revenues climbed 20% due to robust volatility, a rebound in equity and debt issuance, and a long-awaited clearing of private equity portfolios. Even long-term loss-making equity desks returned to the black.
This broad growth allowed major banks to aggressively raise group return on equity (RoE) targets, in some cases as high as 18%. Wall Street remains bullish looking ahead to 2026, with participants expecting that US stimulus and deregulation will sustain momentum.
Additionally, M&A activity could potentially surpass 2021 records, despite isolated volatility in the software sector.
2. Capital requirements loosen, but regulators ratchet up scrutiny
US regulation underwent a period of tightening in the wake of the global financial crisis. The current administration has pivoted to a phase of strategic deregulation. This is characterised by the watering down of the Supplementary Leverage Ratio (SLR) and Stress Capital Buffers, alongside less frequent stress testing.
However, Clarke noted, the transition from the Gensler to the Atkins-led Securities and Exchange Commission (SEC) has replaced heavy fines with rigorous disclosure demands.
“Atkins is a fan of many broker reporting requirements which require getting your data model and your data automation into good shape. So just because capital is getting easier, hygiene around how you're routing your trades if you're a broker, how you're reporting, is as tricky as it ever was.”
As a result, operational hygiene remains a challenge, despite the easing of capital rules.
3. Competition is increasing
The traditional dominance of the US ‘bulge bracket’ is facing an energised challenge from the broader industry. Both foreign and regional banks are shifting from post-crisis retrenchment to an aggressive, across-the-board "leaning in."
“The tone when I spend time with the foreign banks in New York is one of people doubling down. They're starting new trading desks. They are going down the credit spectrum in terms of what they want to put on. They are beefing up their prime brokerage operations to serve new clients.”
Regional banks are increasingly signaling wholesale ambitions through strategic moves. Meanwhile, non-bank market makers are evolving beyond pure electronified trading to provide direct liquidity to institutional investors.
With nearly every major player expanding their footprint rather than recoiling, the current environment is defined by shifting tectonic plates that promise exceptionally robust liquidity provision for asset managers.
4. The sell-side landscape is consolidating
The US financial sector is entering a period of rapid consolidation, with meaningful merger and acquisition (M&A) activity occurring every few days. Banks are capitalising on a permissive regulatory environment and board-level compliance ahead of the midterms.
This wave of acquisitions spans bank-on-bank deals, foreign entries into the US market, and strategic "stovepipe" expansions into wealth management, fund administration, and sector-specific M&A boutiques.
Both Global Systemically Important Banks (GSIBs) and foreign players are scrambling to "gobble up" specialised firms and custodial businesses. The market is shifting toward a more integrated and consolidated landscape across the entire sell-side and wholesale spectrum.
This, Clarke said, also has implications for your operating model.
“Banks' operating models are trending in a more complex direction now. The more tuck-in M&A you do, the more bolt-on M&A you do, you're going to be left with a ball of wool in terms of your internal data policy, your internal risk management policy. All of this is going to need to be aligned and ironed out over the next few years.”
5. Increased focus on digital assets brings new operational complexity
The sell-side is increasingly focused on integrating digital assets, Clarke said. However, banks are finding that the technical "plumbing" - from custody to exchange linkages - is notoriously difficult to manage internally.
This has triggered a shift toward white-labelled solutions and "frenemy" partnerships with non-banks to deliver crypto liquidity to the buy-side.
Ultimately, this movement toward newer, more fragmented products is reversing the decade-long industry trend of operational simplification. By embracing this inherent complexity, banks are creating a more intricate operating environment.
Success here will rely heavily on the vendor community to bridge emerging capability gaps.
Five essential buy-side insights
The buy-side is enjoying a new "supercycle" of growth, but this prosperity brings its own set of structural challenges. EBITDA margins are healthier than they have been in years, but the quest for alpha is leading asset managers into increasingly complex territory.
Success in 2026 is no longer just about investment performance. It’s about the ability to scale sophisticated data strategies and manage the "operational indigestion" that comes with entering new markets.
Firms are pivoting toward private credit and cross-asset quantamental models. The leaders in this space will be defined by their willingness to professionalise their infrastructure and reimagine their distribution networks.
Here are five trends you need to know.
1. Quantamental investment landscape leverages complex data signals
The quantamental investment landscape is evolving toward a sophisticated cross-asset approach. Managers increasingly leverage signals from disparate markets, such as credit traders utilising data from listed options, to inform their strategies.
The most successful buy-side firms are moving beyond traditional silos to unlock the necessary data insights required to power such a strategy. They are automating data ingestion and extraction to capture and act on these inter-market trading patterns.
This shift marks a transition toward a more integrated, data-driven investment model; one that relies on the ability to process complex information flows from across the entire capital markets spectrum.
2. Buy-side rebound continues
The buy-side is in a strong position, compared to seven or eight years ago. Firms have enjoyed consecutive years of improving EBITDA margins and a resurgent hedge fund "supercycle" where launches now outpace closures.
However, this growth is being undermined by operational "indigestion".
“The thing that is causing operational complexity on the buy-side is moving into alts and private credit without getting the operating model nailed down before they do that.”
Many asset managers are still relying on manual processes and spreadsheets for complex portfolio mastering, even when dealing with private credit where AUM is growing rapidly.
Firms need to “professionalise” their operating models to bridge the gap between their aggressive investment ambitions and lagging back-office capabilities, Clarke said.
3. Relationship between prime brokers and buy-sides is maturing
Buy-sides are enjoying a more professionalised and transparent relationship with prime brokers, Clarke said. The past decade was categorised by limited visibility, but now enhanced market infrastructure and specialised vendor solutions have provided funds with significantly greater insight into cost of funds and balance sheet optimisation.
This shift has enabled a more rigorous, two-way dialogue, allowing both parties to collaborate on collateral management and warehousing strategies for mutual benefit.
Ultimately, the evolution represents a transition toward a more balanced and data-driven engagement model. This prioritises operational efficiency and shared value for both the broker and the client.
4. Fund distribution tops buy-side agenda
Asset managers are increasingly identifying access to the Registered Investment Advisor (RIA) "storefront" as their primary engine for growth. A definitive, frictionless model for navigating this space remains elusive. However, a burgeoning market infrastructure is rapidly developing to bridge the gap between institutional products and wealth management platforms.
This strategic pivot highlights a broader industry move to capture diversified capital. Firms are prioritising retail and independent advisor channels over traditional institutional flows.
5. Surging volumes pressure back office infrastructure
The buy-side is navigating an unprecedented surge in volume and velocity across a broader range of asset classes. It’s a trend that has been further accelerated by the integration of AI.
This intensification has pushed legacy middle and back office infrastructures to their functional limits. There’s an urgent mandate for operational excellence as firms find themselves caught between aggressive execution demands and complex allocator requirements.
In response, asset managers are fundamentally re-engineering their front-to-back workflows by leveraging AI-driven reimagining where applicable and basic structural overhauls where necessary.
The goal is to bridge the widening gap between their ambitious investment strategies and their current processing capabilities.
Top five takeaways for market infrastructure providers
Market infrastructure providers are currently navigating a pivot point as the "easy wins" of the last decade begin to plateau. Electronification of core asset classes is slowing, with further gains in this space increasingly hard to realise.
The race is on to capture the next frontier of liquidity in more complex, opaque markets. However, this expansion is happening against a backdrop of shifting geopolitics and a new set of technological imperatives.
Providers are now being asked to do more than just facilitate trades. They are being tasked with inheriting the operational resilience requirements of their clients and proving their worth in an AI-driven ecosystem.
The industry is moving away from a unified global model toward a more regionalised, specialised future. The winners will be those who can provide optionality while maintaining rock-solid stability.
Here are five trends that are defining the industry.
1. Market players explore broader asset classes as corporate credit electronification slows
The era of rapid electronification in US investment-grade corporate bonds is decelerating as the market reaches a 50% saturation point. Market infrastructure providers are now seeking growth in earlier-stage asset classes.
These players are expanding their reach into collateralised loan obligations (CLOs), municipal bonds, and private label mortgage-backed securities (MBS), while simultaneously attempting to electronify segments of the private and pre-initial public offering (IPO) secondary markets.
This shift toward providing greater optionality across diverse liquidity protocols offers broker-dealers and asset managers more robust tools, even as the industry moves beyond the "easy wins" of corporate credit automation.
2. Operational resilience is a top priority
Market infrastructure (MI) providers are facing a significant surge in demand for operational resilience. This is being driven by banks "exporting" their own regulatory pressures.
MI firms aren't always directly overseen by the Federal Reserve. However, their bank clients are increasingly mandating strict operational hygiene to satisfy their own regulators. This includes kill switches, failover redundancies, and outage limitations.
This shift is forcing many infrastructures to rapidly scale their resilience capabilities in order to maintain seamless, low-risk connectivity for their counterparties.
3. AI enablement is non-negotiable
The fintech and market infrastructure sector is facing a critical inflection point regarding AI enablement. Clarke observed that the absence of a proactive strategy is directly impacting valuations.
Firms that have successfully defined their "data moats" and created architectures ready for client-side AI agent deployment are distancing themselves from those without a clear plan.
This "drumbeat" of market pressure is forcing a rapid realisation that AI readiness is no longer optional. Instead, it is a fundamental requirement for maintaining competitiveness and institutional confidence over the next several years.
4. Regional fragmentation forces post-trade redesign
The global landscape for market infrastructure is shifting toward regional fragmentation, moving away from the post-trade globalisation that has defined the last few decades.
Much of this is driven by US administrative policies and shifting geopolitical stances. Many jurisdictions are now prioritising the creation of self-contained national "stovepipes" rather than universal integration.
“The shockwaves of what the administration has done are still percolating through the rest of the world when the rest of the world thinks about how they want to set up their market infrastructure.”
This retreat from a singular global model is forcing a redesign of post-trade systems within specific national contexts. The immediate headlines around tariffs may have cooled, but it seems the long-term trend toward localised, sovereign-aligned infrastructure is only just beginning to take hold.
5. Exchange-level players bet on crypto, tokenisation, and prediction
Clarke shared that his exchange-level clients are taking increasingly bold bets on crypto markets, tokenisation markets and prediction markets.
Although there are some instances of firms “looking for a nail”, in many cases Clarke observed strong market fit. For example, “hooking up crypto trading to retail brokers” or exploring the signal value of prediction markets for other trading strategies.
“Those market infrastructures that have taken early moves there are already seeing the benefit in their other business lines. That's another trend where we're going to see a bit more hard thinking, and probably a bit more capital deployed as well into those newer zones.”
AI in capital markets: The search for alpha in an automated world
The trends above mention AI more than once. But all firms are facing a dilemma here: how to turn a ubiquitous technology into a genuine differentiator. Clarke suggested that the industry is currently moving past the initial hype and into a difficult "constrained optimisation" phase.
Here, the choice between building, buying, or partnering determines whether AI is a strategic asset or merely a "beta" requirement for entry.
The "levelling effect” of point solutions
Clarke noted that many niche AI vendors offering specific workflow automations (e.g. for investment banking) essentially create a level playing field.
If every major player adopts the same third-party point solution, the technology becomes a commodity rather than a competitive advantage.
Firms using identical "off-the-shelf" AI solutions will improve baseline efficiency, but won’t gain a unique edge over rivals.
The struggle of "bank tech"
To escape this commoditisation, many banks are attempting to build proprietary AI-driven applications for sensitive areas like credit memos and anti-money laundering (AML).
However, Clarke observes that these internal efforts often struggle under the weight of traditional "bank tech" constraints.
“Bank tech departments have always been populated by extremely talented people working in a constrained optimisation environment. Just because it's AI doesn't mean their job has got any less constrained.”
AI projects, like other technology, will still require three lines of defence, external audit and need to be signed off in model risk management by the regulator, Clarke said.
Firms are therefore in a tough spot, where internal builds lack the polish of specialised fintechs, while fragmented point solutions fail to deliver significant headcount productivity gains.
The emergence of "agent-ready" partnerships
The most promising path forward, according to Clarke, lies in a hybrid model involving sophisticated capital markets vendors.
The "winners" in 2026 are likely to be established fintechs that have opened their platforms to client-led interrogation of AI agents.
There’s a growing tension here. Some legacy fintechs are "hostile" to the idea of clients using their own AI agents to pull data or automate workflows, fearing a loss of their proprietary "moat."
But this is a losing battle, Clarke argued. The market is increasingly rewarding "outward-facing" software companies that allow client agents to interact seamlessly with their data.
The public markets are already proving unforgiving to software providers that lack a clear AI enablement plan. For Clarke, the "biggest bang for the buck" doesn't come from a pure build or a pure buy strategy. Instead, it comes from an ecosystem where vendors and clients collaborate via agentic tools.
While the landscape is shifting in real time, the ability to maintain "operational hygiene" while allowing for AI-driven flexibility is becoming the new benchmark for success in capital markets.
Summary
The overarching sentiment across capital markets is one of significant optimism and opportunity.
The industry has departed from the post-financial crisis “gloom” and the uncertainty of the immediate post-COVID era. Market participants across the sell-side, buy-side, and infrastructure sectors are preparing for a year of growth, profit accretion, and higher returns.
However, this ambition is tempered by a disconnect between these goals and current operational capabilities.
To bridge this gap, the industry must undergo a period of "profound re-piping" - deep process re-engineering and a strategic reliance on tier-one fintech vendors to manage non-core functions.
AI stands out as a technology that can have significant operational impact, but only when it has the necessary breadth of functionality, guardrails and interconnectivity.
Ultimately, success in 2026 will depend on a firm's ability to rethink its operating model with a level of imagination and technical agility that matches its market aspirations.
