Only 1 in 5 firms excels at supporting new regulation and responding rapidly to client demands Leading firms are rethinking their operations, forming external partnerships.
NEW YORK, N.Y. – 21 September 2012: A new report released by IBM (NYSE:IBM) in collaboration withBroadridge Financial Solutions, Inc. (NYSE:BR) reveals that increasing regulatory pressures and shifting customer demands are forcing financial markets firms to transform how they operate. Forward-thinking firms are breaking away from the industry’s long-held “not invented here” approach to managing operations to create a more open, agile and customer-focused model that expands the traditional boundaries of collaboration with external partners.
In a survey of 133 senior business executives and top IT decision makers from large and small firms located in the world’s trading centers – the United States, United Kingdom, Singapore and Hong Kong – 77 percent cite regulatory requirements and 59 percent point to more demanding customers as the top external market drivers triggering changes in their operating models. Only 22 percent of the firms currently excel at meeting both.
“Regulation and operating efficiency have always been concerns for securities firms, but the growing demands and sophistication of today’s financial services clients are requiring firms to innovate not just in the products they offer, but also in how they adapt and run their businesses,” said Ron Lefferts, financial markets industry leader for IBM Global Business Services. “Leading firms have looked at their own ecosystems and are embracing new operating models as part of their organizational DNA to get closer to their clients and create a differentiated experience.”
The battle to retain customers and grow share has become more intense for financial markets firms. In fact, industry analysts estimate 15 to 20 percent of wholesale and investment banking clients will be shopping for a new provider in the next few years.
The new research, conducted by the IBM Center for Applied Insights, uncovers how firms are changing their operating models in response to these challenges. The research shows that leading firms are gaining market share by looking outward, addressing how they interact with the marketplace. These firms are creating a different kind of operating model with a more holistic view across front, middle and back offices and into their clients’ own operations.
Leading firms are also collaborating more effectively. They are more inclined to build operating models that leverage their partners’ expertise, technology and scale to reduce fixed costs while creating business agility to respond to market opportunities.
“Based on regulatory, competitive and margin pressures facing financial services firms today, current operational systems are challenged to deliver the needed scale and cost efficiencies,” said Charles Marchesani, Corporate Vice President, Securities Processing Solutions, Broadridge. “Increasingly, financial firms are looking externally to adopt more flexible and scalable operating models to quickly respond to new growth opportunities and the continuous regulatory changes.”
While some firms have adapted to the current market challenges by redesigning their operations, an equal number of firms have been slow to respond. According to the report, firms fall into one of three categories based on how far along they are in effectively supporting both regulation and new client demands:
The Leaders consistently outperform the Laggards across a number of key capabilities.
To access the full report, “Beating market mandates: How winners are re-engineering financial markets operations,” visit: www.ibm.com/financialmarkets/opsleadership
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In April 2010, IBM and Broadridge signed a business alliance agreement to deliver an extensive portfolio of technology-based solutions and services to the financial services industry.
Broadridge Financial Solutions, Inc. (NYSE:BR) is the leading provider of investor communications and technology-driven solutions for broker-dealers, banks, mutual funds and other corporations. Broadridge’s investor and customer communications, securities processing and managed services solutions help clients reduce their capital investments in operations infrastructure, allowing them to increase their focus on core business activities. With over 50 years of experience, Broadridge's infrastructure underpins proxy voting services for over 90% of public companies and mutual funds in North America and processes on average $5 trillion in equity and fixed income trades per day. Broadridge employs approximately 10,000 associates in 14 countries.
For more information about Broadridge, please visit www.broadridge.com.