Broadridge has released some of the findings from its 2024 Digital Transformation and Next-Gen Tech Study to reveal the latest trends and attitudes across sell-side firms at industry conference TradeTech Europe 2024.
The findings, which canvas the views of 130 sell-side firms including commercial and investment banks, broker-dealers, and universal banks globally with total assets ranging from $1 billion to more than $250 billion, highlight four key themes:
- Blockchain investment is on the rise: Firms are planning to increase investment in blockchain by 21% on average over the next two years. Of those investing, more than a third (37%) are currently prioritizing their blockchain investment in trading, transactions and loans. This figure is expected to jump to 42% in the next two years. A similar number of respondents (44%) say they plan to prioritize blockchain investment in operations, including clearing and settlement in the next 2 years.
- Artificial intelligence (AI) will transform customer experience and distributed ledger technology (DLT) will reduce the need for intermediaries: Half of sell-side firms believe that their strategy and business approach will be radically transformed by technology in the next 5 years. More than a third (38%) say that blockchain and DLT will reduce the need for financial intermediaries, including custodians and clearing houses. End customers will be the winner with more than three quarters of executives (77%) saying they believe that AI will lead to a significant improvement in the customer experience.
- Cyber security is the top priority: When asked what the most important things firms want from technology vendors are when it comes to digital transformation, the most popular response (50%) is to ensure their solutions are fully cyber secure, and 35% want providers to launch entirely new solutions that use next-gen technology. A third said they want solutions that integrate easily with existing systems, and more than a quarter (28%) want vendors to build next-gen technology into their existing solutions.
- Legacy systems continue to hold the sell-side back: The top challenges inhibiting digital transformation across the sell side include cybersecurity risks (36%), skill shortages (32%) and insufficient budgets (32%). A quarter of firms (25%) are being held back by inflexible legacy systems and inadequate IT infrastructure.
Ian Mawdsley, chief product officer at Broadridge Trading and Connectivity Solutions, said in a statement: “The sell-side see huge potential when it comes to next-generation technologies. The majority of firms are in agreement that the ultimate winner of their successful digital transformation will be their end clients, particularly when it comes to AI investments.
“Blockchain and DLT is also driving a lot of excitement and rightly so. Many believe these technologies could have a radical impact on their day to day operations, and could potentially eliminate the need for the financial intermediaries that they rely on today.
“Unfortunately, legacy systems and outdated IT infrastructure continue to be a big hurdle. To overcome this and to accelerate their digital transformation journey, firms need to invest in fixing this problem and make the shift to modern IT platforms.”