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HONG KONG – 18 August 2020 – The majority of Hong Kong’s brokers see their technology systems as their biggest concern while they respond to growing demands for market and investment diversification offerings from investors, according to the “Asian Brokerage in Transformation” report, an industry-wide study released this week conducted by the ValueExchange in cooperation with Broadridge Financial Solutions, Inc. (NYSE:BR) and Interactive Brokers.
Hong Kong investors aim to expand portfolios to globally balanced investments
Hong Kong’s brokers are under significant pressure to expand their offerings into new global markets and asset classes outside of Hong Kong as they seek to keep up with investor demand. 52% of Hong Kong-based investors this year are seeking to diversify their portfolios and find new global investment opportunities. The study highlights a strong focus on North American markets, with 56% of the investors putting them at the centre of their global outlook, narrowly eclipsing Asian markets (54%). They also present expansion plans towards fixed income (expanding at 15% year-on-year) and private equity assets (11%).
Technology restraints limited Hong Kong brokers’ ability to expand offerings
Investors’ multi-asset approach means brokers are required to ensure the right risk management tools for global securities, new market connectivity and systems can run 24/7. Brokers are struggling to expand in key areas and appear to be lagging by up to 12 months behind customers’ demand for broadened capabilities, markets and products.
Underpinning this challenge are brokers’ technology systems, which were highlighted as the key concern in their ability to expand product offerings. Over 57% of brokers believe that their current technology platforms are not scalable enough to support their growth plans – owing to issues around automation, compliance and operational resilience.
“Hong Kong’s brokers are faced with a choice - either they choose to invest incrementally today, building a new foundation for their business that sets them on a path of scalable and secure growth, or they choose to be left behind.”, according to Barnaby Nelson, CEO of the ValueExchange.
Brokers prioritise system automation for business expansion
With the highest importance rating of 78%, system automation is brokers’ primary focus today as they look to expand and diversify their businesses, even ahead of profitability, followed by regulatory compliance (76%).
“Hong Kong’s leading brokers are now beginning to prioritise the quality of global expertise and automation that they can derive from leveraging international technology platforms and technology infrastructure providers with global scale and multi-asset capabilities”, said Broadridge’s Kurt Eldridge, APAC Head of Sales.
The “Asian Brokerage in Transformation” report draws on feedback from over 100 Hong Kong-based brokerages and over 140 investors. Conducted in June 2020, the survey explores the driving factors behind Hong Kong brokers’ expansion plans and sets out new, industry best-practices around how to best execute on a global expansion strategy.
About the ValueExchange
The ValueExchange is an international market research and benchmarking company, focused on the global capital markets. Leveraging over 20 years of direct involvement in the Asian securities industry, ValueExchange provides industry participants with unique, actionable insights that help to drive growth.
Broadridge Financial Solutions (NYSE: BR), a global Fintech leader with over $4.5 billion in revenues, provides the critical infrastructure that powers investing, corporate governance, and communications to enable better financial lives. We deliver technology-driven solutions to banks, broker-dealers, asset and wealth managers and public companies. Broadridge’s infrastructure serves as a global communications hub enabling corporate governance by linking thousands of public companies and mutual funds to tens of millions of individual and institutional investors around the world. In addition, Broadridge’s technology and operations platforms underpin the daily trading of on average more than U.S. $10 trillion of equities, fixed income and other securities globally. A certified Great Place to Work®, Broadridge is a part of the S&P 500® Index, employing over 12,000 associates in 21 countries.
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