CEO, US Broker Dealer

Leaders say

A growing regulatory burden and the move to t+1 have far-reaching impacts on technology infrastructure and operational processes.

Competitive dynamics, cost pressures, and regulation increase the need for transformation

“We can onboard customers to new products completely digitally with minimal human intervention and automatic straight through processing in generation of documents and approval, making the process as quick and effective as possible.”

Increased competition and reduced margins are driving consolidation as firms seek scale to invest in next-gen technologies and digitalization.

Expansion to new markets, new asset classes, and new trends (such as digital assets) present opportunities and challenges.

The C-suite sees a digital future

Digital transformation is now the top strategic priority for many capital markets firms. Despite economic headwinds, they are ramping up investment to stay competitive as industry dynamics evolve.

Keeping up with the rapid pace of change

Head of Operations, US Commercial/Investment Bank

“To achieve the greatest efficiency over the next five years, it will be crucial to concentrate on blockchain, as it promotes transparency and reduces counterparty risks involved with transactions.”

CTO, Danish Broker Dealer

“We are improving our data analysis tools in response to new demands to create predictive analytics and anomalous fraud detection during transactions, which will be critical for our business in the coming years.”

Head of Business Unit, Singaporean Commercial/Investment Bank

“In the upcoming years, personalized services based on artificial intelligence and machine learning will transform conventional banking, which will substantially boost revenue generation.”

Leaders in our maturity framework are increasing spend and prioritizing cybersecurity, data analysis/visualization, and AI for investment.

Capital markets Leaders prioritizing spend on next-gen technologies

of respondents say it is now their most important strategic initiative

of IT budgets are now allocated to digital transformation – up from 11% last year

Metaverse

AI is also starting to deliver value and having an impact on day-to-day work, with more change to come as it becomes more powerful.

Accelerating simplification across the trade lifecycle and asset classes

Modern technology platforms underpin business growth and innovation

Gather and integrate all data across the firm

of Leaders are at an advanced stage of applying AI and other emerging technologies

think the industry will modernize its tech stack before we land a human on Mars

AI and data are key to unlocking gains: If executives had a magic wand to accelerate transformation, they said they would:

Capital markets firms are striving to reduce costs and risk while strengthening their agility and ability to grow. They know they need to modernize, but many are constrained by budget, talent gaps, and limited appetite for large-scale, complex multiyear projects. Despite challenges, there is optimism among the sell-side that the industry will modernize its tech stack before we land a human on Mars, currently estimated to happen within a decade. Firms classed as Leaders are making progress with replacing fragmented systems across the front, middle, and back office with consolidated technology platforms. This provides a foundation for innovating with technologies such as AI and DLT.

Leaders are increasing investment across technologies

Percentage point increase in investment planned over next 2 years

Quantum computing

Blockchain

Data analysis/ visualization

Cybersecurity

%

Forward-thinking capital markets firms are achieving global trading and operational transformation and simplification through innovative, modular, multi asset solutions across the trade lifecycle. These componentized solutions reduce the need for long multi-year projects, and accelerate digitalization through a common data layer and tech stack.

Modernization and simplification drive front- to back-office transformation

Distributed Ledger Technology: ready for prime time

Platforms now creating tangible value

Firms on the buy-side and sell-side can enhance the repo trade lifecycle through a blockchain-based Distributed Ledger Repo platform; a single platform where market participants can agree, execute, and settle repo transactions. The platform significantly increases settlement velocity and collateral mobility while reducing operating costs and risks associated with repo activity.

DLT Simplifies Operations and Reduces Costs

What are the practical steps Digital Leaders on the sell-side take to accelerate transformation?

Broadridge partners with clients across Capital Markets, Wealth, and Asset Management, to accelerate digital transformation. We modernize platforms, digitize communications, and offer next-gen technology and data solutions that help our clients capitalize on emerging opportunities.

Broadridge prepares you for what’s next

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Increasing spending on next-gen tech by 24% in the next two years vs. 18% for Non-leaders

At an advanced stage of replacing legacy systems with modern cloud-based platforms

Seven times more likely to have advanced integrated data platforms across business departments

Fifteen times more likely to be at the advanced stages of applying AI and other emerging technologies

Let's talk

Dramatically expand the use of AI and automation across the enterprise

Eliminate legacy systems and move to a modern platform

Real-world applications

Explore the data Click each topic (right) to compare Leader and Non-leader responses

Leaders

30 %

Non-leaders

2 %

Increasing spending on next-gen tech by 24% in the next two years vs. 18% for Non-leaders

At an advanced stage of replacing legacy systems with modern cloud-based platforms

Seven times more likely to have advanced integrated data platforms across business departments

Fifteen times more likely to be at the advanced stages of applying AI and other emerging technologies

Leaders

61 %

Non-leaders

8 %

Increasing spending on next-gen tech by 24% in the next two years vs. 18% for Non-leaders

At an advanced stage of replacing legacy systems with modern cloud-based platforms

Seven times more likely to have advanced integrated data platforms across business departments

Leaders

35 %

Non-leaders

11 %

Fifteen times more likely to be at the advanced stages of applying AI and other emerging technologies

Increasing spending on next-gen tech by 24% in the next two years vs. 18% for Non-leaders

At an advanced stage of replacing legacy systems with modern cloud-based platforms

Leaders

24 %

Non-leaders

18 %

Seven times more likely to have advanced integrated data platforms across business departments

Fifteen times more likely to be at the advanced stages of applying AI and other emerging technologies

Increasing spending on next-gen tech by 24% in the next two years vs. 18% for Non-leaders

At an advanced stage of replacing legacy systems with modern cloud-based platforms

Seven times more likely to have advanced integrated data platforms across business departments

Fifteen times more likely to be at the advanced stages of applying AI and other emerging technologies

More than 30 dealers and 70+ buy-side firms are on LTX, an AI-driven e-trading platform, benefitting from new transparency and efficiency in the United States corporate bond market. The platform uses data science and AI to improve liquidity and execution.

AI-Driven Platform Enables Smarter Trading

13

5

22

24

30

of firms classed as Leaders are at an advanced stage of replacing legacy systems with cloud-based IT platforms

This report provides practical guidance on how executives are investing and what firms classed as Digital Leaders do differently to accelerate transformation.

We categorized firms as Leaders or Non-leaders based on how advanced they are in the most essential aspects of digital transformation. This includes their innovation culture, use of emerging technologies, modern IT infrastructure, seamless customer experience (CX), internal skill-building, and adoption of security and privacy protocols.

What defines a Leader

We interviewed C-suite executives and direct reports in business and technology roles from 130 capital markets firms across North America, EMEA, and APAC to understand the progress they've made with digital transformation, the challenges they face, and their plans for the future.

Here's what comes next

A new phase in digital transformation for capital markets firms

Full service institutions

Commercial/ investment banks

Broker dealers

AI

%

23 say AI is now significantly changing the way they work

of respondents agreed that Blockchain/DLT will become the core of financial markets infrastructure within the next 10 years. Although there are challenges to overcome, several live blockchain platforms are already providing measurable benefits.