Why are investment banks adopting shared infrastructure?

Banks are adopting shared infrastructure to reduce operational complexity, lower costs, and create systems capable of supporting advanced technologies like artificial intelligence.

City of London Investment Banks Shift to Shared Infrastructure

Investment banks are moving away from self-operated back-office functions towards collaborative systems to support AI and reduce operational complexity.

2026-10-15 · Updated 2026-10-15

Forty years after the Big Bang reforms transformed the City of London into a global electronic marketplace, a new structural shift is underway. This revolution is not occurring on trading floors, but within the essential infrastructure that supports capital markets.

Historically, investment banks managed their own post-trade operations, such as settlements and regulatory reporting, within the Square Mile. This model, once seen as a sign of control, is now becoming unsustainable due to the increasing complexity of global financial markets.

The current infrastructure, built over decades and often customized through acquisitions, is struggling to keep pace with modern demands, particularly the integration of artificial intelligence. AI functions best in well-governed environments, which many banks' legacy systems cannot adequately provide.

In response, capital markets are moving towards what is being called 'Big Bang 2.0.' Instead of owning all infrastructure independently, banks are collaborating to create shared systems, similar to co-working spaces for technology. This approach aims to lower operational complexity and make fixed costs more variable, mirroring trends seen in the broader technology industry.

This shift is blurring the lines between internal bank operations and external service providers, with some banks already outsourcing their over-the-counter derivatives post-trade work. The future of investment banking will rely on this invisible infrastructure, promising a more seamless operation of capital markets.

FAQ

What is the 'Big Bang 2.0' in capital markets?: Big Bang 2.0 refers to the current trend of investment banks moving away from self-operated back-office functions towards shared, collaborative infrastructure systems.
Why are investment banks adopting shared infrastructure?: Banks are adopting shared infrastructure to reduce operational complexity, lower costs, and create systems capable of supporting advanced technologies like artificial intelligence.