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Experience Counts: Leveraging Regulatory Data for Improved Customer Experience and Profitability

In the wake of unprecedented market uncertainty, Capital Markets firms are under tremendous pressure to retain and reassure customers. At the same time, a crop of new regulations requires greater transparency, accountability and fiduciary responsibility. Firms can either view these as competing challenges or make the most of the underlying opportunity.

Both customer experience and compliance are reliant on data – and firms that recognize and capitalize on that fact will be best positioned to succeed. Efficient management of customer and trading data yields a treasure trove of insight to drive better decisions, inform and assure customers, satisfy regulators and drive efficiencies across the entire organization.

Putting the customer in the center

In a recent study, Ernst & Young discovered a strong correlation between happy customers and growth in both revenue and market share. Firms with the most successful customer experience strategies were focused on customer needs and able to apply analytics to understand customer data at a granular level.

Not surprisingly, many leading firms are now shifting their focus to the customer experience. In fact, nearly three-quarters of respondents in a recent survey of Capital Markets CEOs stated that customer experience will be their top priority in the coming year.

Disconnected data

Customers have come to expect easy, frictionless interactions and a high level of personalization, based on their experiences with companies like Amazon and Apple. These companies have demonstrated that highly detailed knowledge of customer goals and preferences can be used to deliver a world-class experience that is both relevant and seamlessly anticipates customer needs.

The problem for Capital Markets firms is that their customer data — contact information, account numbers, trading history and more — is scattered across multiple legacy systems that were never intended to work together or communicate. Firms are keenly aware of the immense value locked up in these disparate systems, but aggregating customer data is challenging, time-consuming and costly. The effort and expense of creating a comprehensive database of accurate, timely customer data have been hard to justify — until now.

CAT changes everything

The Consolidated Audit Trail (CAT), mandates the creation of a central repository to help regulators more efficiently track activity in U.S. equities and options. It requires broker-dealers to provide detailed information pertaining to quotes and orders, including origination, modification, cancellation, routing and execution, along with customer identifying information.

Broker-dealers that have not previously maintained a data pool for their trading data and investor information now must invest in aggregating this data. The resulting database can provide a high-level, holistic view of overall trends and patterns in each investor’s trading history. In other words, it enables the creation of rich profiles that can fuel more seamless, targeted and compelling experiences.

Converting customer data into a competitive advantage

Firms can enrich their CAT data with web metrics, revenue and operational data to gain valuable insights into their customer relationships and business operations. Using analytics to segment customers by goals and trading behavior, firms can develop strategies that elevate service and enhance customer satisfaction, such as custom-tailored service offerings, personalized investment advice or even targeted products.

Building a reputation for operational excellence

Firms can also benefit from aggregated collection of data on many more levels, from optimized trade data reporting and transparency to operational and trading efficiency and scalability. For example, firms with more consistent, timely and accurate data are likely to experience fewer data matching breaks when reporting securities trades under SFTR. Those firms who gain a reputation for accurate SFTR reporting are likely to become sought-after trading partners, as firms seek to minimize the labor costs and delays associated with mismatched data.

Delivering value

Regulation Best Interest in the U.S. and MiFID II in the E.U. were both enacted to ensure that brokers place their customers' interests first. Data consolidation enables firms to monitor trading activity to detect any suspicious patterns and ensure that trades are executed in a manner that customers benefit from the most advantageous order execution.

In summary, the same data that firms use for regulatory reporting can be leveraged to develop a deeper understanding of their customers. This insight can, in turn, deliver a richer, more personalized experience that boosts retention, engenders trust, facilitates cross-sell and upsell opportunities, and drives higher revenues.

Is your firm ready to leverage regulatory reporting data to deliver a better customer experience--and improve profitability? Broadridge can help you stay ahead of regulatory complexity and capitalize on the insights hidden in your trading and customer data. We see what’s coming because the industry runs through us. Explore the leading technologies, operations and expertise that add transparency and control at every step.

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