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The Case for a Multi-Asset Approach to Post-Trade Processing

Podcast

Video Transcript

00:00 - 00:06
Virginie O'Shea - Firebrand Research
I'm here with Danny Green from Broadridge. Danny, do you want to introduce yourself?

00:07 - 00:12
Green, Danny - Broadridge
Hi yes, I'm Danny Green. I'm the head of the international post-trade business at Broadridge.

00:13 - 00:32
Virginie O'Shea - Firebrand Research
Fantastic. And we're here to chat about some recent research we've put together. So, first things first, we highlighted one key stat in the research which is that there's an average of 9.1 post-trade processing systems in place in the average sell side firm. So, Danny, why do you think there are so many silos in these firms?

00:33 - 00:57
Green, Danny - Broadridge
I can well believe the average of 9.1. I have replaced multiple systems in a single implementation. The two key reasons I believe behind this are one, due to mergers and acquisitions over a period of time with little focus on consolidation. And historically, business lines have been split by geography or asset class and life cycle stage in many instances with their own systems.

00:59 - 01:18
Virginie O'Shea - Firebrand Research
Sure, certainly. You can see that across the different firms that we spoke to as part of the research. And when it comes to asset class support, the research also highlighted that there are quite a few gaps out there in terms of where firms are struggling and where they're being challenged. Where would you say are these gaps, and what sort of the reason is behind this? And where are these gaps?

01:19 - 01:50
Green, Danny - Broadridge
I mean, I believe firms are struggling with the amount of mandatory change that they need to roll out across multiple silos and a lot of these are in legacy solutions that are difficult and risky to change. This means that creating new services and products for clients cannot always be prioritised, leaving gaps due to target operating model differences between the silos. You can get gaps in services offered to the end clients. Also, there's an element of catch up with the front office product innovation, with post trade, then having to invest after that product has already been put in place.

01:54 - 02:07
Virginie O'Shea - Firebrand Research
Sure, we're always running to catch up with front office innovation on the product side. Definitely, and in terms of moving to a multi asset approach, what are firms thinking are the benefits out there for them in moving in that direction.

02:08 - 02:24
Green, Danny - Broadridge
And then if you look at the research out there, there are many that are highlighted in terms of the benefits. The key ones I believe are the better use of assets on the balance sheet, cost reduction, the improved client service that you would get via a multi-asset approach, and the reduction in risk.

02:25 - 02:33
Virginie O'Shea - Firebrand Research
Sure, and operational risk and resilience is a big thing at the moment with regard to what regulators are talking about, and what financial institutions are talking about for that matter.

02:33 - 02:34
Green, Danny - Broadridge
Yes.

02:34 - 02:45
Virginie O'Shea - Firebrand Research
And in terms of business cases, they are always a bit challenging in post-trade. So how are firms building business cases to be able to address all these gaps and inefficiencies that we're seeing out there?

02:46 - 03:12
Green, Danny - Broadridge
I certainly agree, and this could be the biggest challenge. However, with the potential benefits, it is the right thing to do. I see some firms making the move incrementally, so any new change should provide cross asset capabilities utilising their existing change budgets. Others take a more strategic approach and factor in a multi-year replacement strategy, but with tangible benefits achieved in each year.

03:12 - 03:19
Green, Danny - Broadridge
In both cases, the business case is compelling. It should provide a return on investment quickly.

03:19 - 03:33
Green, Danny - Broadridge
Once you factor in the improvements of operational efficiency, better use of capital and the reduction in the spend on mandatory change, you pretty much get back to that compelling business case that you need to move forward.

03:34 - 03:47
Virginie O'Shea - Firebrand Research
Sure, and I think keeping C-suites engaged and informed as you go through that process is important. Keeping them engaged. Making sure that they know that they're getting a return on the investments they're making at every stage is always very important.

03:47 - 03:48
Green, Danny - Broadridge
Yes.

03:48 - 03:58
Virginie O'Shea - Firebrand Research
So, I would always like to leave people with some advice. So, in terms of your advice for firms considering to adopt a more joined up approach, what should we leave them with?

04:00 - 04:08
Green, Danny - Broadridge
The areas of advice I would provide is to partner with providers who have the same objectives as you, so align to that multi asset approach.

04:09 - 04:20
Green, Danny - Broadridge
Put the work in up front to agree what the target operating model is across your silos. This enables you to clearly articulate in the organisations the language that you want to achieve.

04:21 - 04:36
Green, Danny - Broadridge
Once you have buy-in of the benefits across the organisation, you can use these to create your guiding principles, and whenever you're implementing any change across the organisation, consider these principles and make sure it moves you forward on your journey to a multi-asset solution.

04:37 - 04:43
Virginie O'Shea - Firebrand Research
Sure, it's all part of that journey towards digital transformation, right? Fantastic. Thanks, Danny.

04:44 - 04:45
Green, Danny - Broadridge
Thank you.

Join Virginie O’Shea, Founder of Firebrand Research, and Danny Green, Head of International Post-Trade at Broadridge, as they discuss the impact that siloed post-trade infrastructures have on sell-side firms, and the benefits of moving to a multi-asset post-trade environment.

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