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Capital Markets and Digital: The Foundation for Tomorrow

Digital and data go hand-in-hand—and together, they form the foundation for business transformation.

Nearly everyone in Capital Markets has embraced digital technology, yet firms are still behind where they want to be. Digitized workflows and experiences deliver value on their own. Digitization also fuels the full suite of next-gen technologies, from artificial intelligence and robotics to blockchain and the Cloud.

Some define digital as the convergence of experience, information and technology to create value. For banks and broker-dealers, this value takes shape in four distinct ways.

One: Eliminate paper

COVID-19, and the corresponding surge in remote work environments, has accelerated trends that were already in place. Chief among those is the digitization and automation of workflows. While the initial call was to eliminate paper, this effort also involves transforming static, unstructured digital documents into usable, data-driven formats.

Today, trades and transactions are still processed in every way possible, including a never-ending stream of emails, PDFs, spreadsheets, and phone calls. As such, functions like trade allocation, reconciliation, settlement, and corporate actions processing represent clear opportunities for efficiency.

  • Optical Character Recognition (OCR), combined with elements of machine learning, can distinguish text characters and make data-driven decisions. These applications standardize unstructured data and make it fit for use.
  • Robotic Process Automation (RPA) can then streamline operations, so repeatable tasks can be completed with fewer hands. This not only creates efficiency, but it also adds speed and accuracy.

While some firms will build in-house solutions, industry utilities and managed services can help mutualize these costs.

Two: Energize your data

By their very nature, digital workflows generate data. By standardizing and digitizing records (as noted above) you begin to amass even more data.

This exponential growth in data, combined with increased computing power, have led to the rapid rise in artificial intelligence applications. Capital Markets is the most data sensitive segment of the financial industry—and one of the largest spenders on AI and RPA technology. While the initial focus was on cost reduction, more recent use cases go beyond simple automation to identify trade patterns, uncover natural counterparties and predict pricing.

Three: Accelerate innovation

Capital Markets firms are familiar with the concept of Open Banking, a collaborative model where financial information is shared in open, secure environments. What started as a response to European regulations has now become an avenue for growth. Firms are now embracing open platforms to gain a business advantage.

The concept is simple: Deliver better experiences by building on what already exists. Here, APIs are fueling the next wave of technology innovation. Digital technology makes it possible to open up platforms, break down applications into specific components, and then expose these as services to front-office teams, back-office operations and your end customers as needed.

Four: Create experiences

Digital is not just a technology but a way of doing things. It’s an experience that involves multiple touchpoints for any customer. It’s how you collaborate, communicate and engage with staff, clients and prospects.

Most major financial institutions now have dedicated usability labs and teams comprised of researchers, behavioral engineers, and UX developers. They have also been investing in the technologies underlying digital, such as the migration to micro-services, enabling organizations to be more responsive to customer needs and continually improve their web and app properties without wholesale re-writes.

For example, JPMorgan Chase1 summarizes their digital strategy in four simple tenets:

  • Choice – giving the customers what they want, when they want, how they want it
  • Security – protecting the customer and the firm
  • Ease of doing business – delivered fast and simply
  • Personalization from transactions to integrated experiences

These experiences particularly come into play in times like today, where COVID-19 has led to greater volatility and greater uncertainty. Firms unable to reassure clients with traditional “face to face” meetings are seeking ways to deliver greater transparency using digital technologies.

Be ready today and tomorrow

Due to our broad customer base and the trust we have established with them, Broadridge has a unique ability to leverage data to deliver stronger customer experiences. Given our network of financial institutions and others, we can leverage network effects to deliver industry-leading solutions and mutualize the investments they require.

Every day, we simplify the complex with The ABCDs of Innovation®. It’s how we help our clients understand and apply next-gen technologies—including AI, blockchain, the Cloud and digital—to transform their business and get ready for what’s next.

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