Technology and the ways data are being used to make trading decisions and better understand markets continue to evolve quickly for financial services firms. Those at the forefront of fintech innovation and integration are rapidly gaining advantages over competitors.
In this piece, we talk with Michael Alexander, president of Broadridge North America Wealth and Capital Markets Solutions, about technology trends and how they’re reshaping the way financial services firms do business.
What new technology trends do you expect to see in 2020 when it comes to financial services? How will the industry continue to evolve?
We believe that while there is continued focus on leveraging emerging technology to transform business and operations models, most firms are looking to simplify their complex infrastructure that has grown in a fragmented way across geographies and asset classes. The larger industry players are actively pursuing M&A activity to build out solution suites that push industry participants towards a one-stop shop model for fintech services. These aim to create a best-of-breed combination of software-as-a-service (SaaS)-delivered solutions via a single browser.
How do you think about the regulatory environment when approaching the use of technology in the securities industry?
Technology is increasingly being used to scale regulatory surveillance and compliance. Newer technology enables firms to identify hard to diagnose problems and allows them to focus on those items requiring attention. We also see compliance moving into the non-differentiating bucket as industry participants realize it is best to mutualize the investments and cost to comply through a trusted third-party partner. The move to offering regulatory compliance technology and operations via a SaaS model is being adopted quickly.
How are machine learning and robotics changing the way broker dealers do business?
Robotics and machine learning are being used to increase scale, improve process quality and enhance risk management. The advent of this technology has also led to the creation of tools and methodologies that help firms estimate potential benefits and prioritize their ideas to maximize return on investment. We believe this coming together of human and digital labor in a managed environment will likely be one where the robots automate repetitive tasks and incrementally increase their capabilities while being actively supervised by their human handlers who have ultimate authority over the robots.
When it comes to emerging technologies, how can companies implement them in a manner that’s cost effective yet keeps them up-to-date?
At Broadridge, we are focused on what we call the “ABCD’s” of innovation: artificial intelligence (AI), blockchain, cloud and digital. Companies need to carefully manage and curate the growth of technologies like AI and machine learning to ensure adequate return on investment. They need to prevent the rapid growth of such automation elements from becoming an infestation without measurable success parameters.
Such innovation requires a combination of the right technology, skilled cross-functional people and considerable volumes of optimal data sets. Industry participants must look to large industry utility players to help mutualize such investments while leveraging the considerably varied and rich data sets across their client network. Broadridge’s rich, vibrant and engaged network of clients enables us to invest in emerging technology and spread the cost of investments across the client base. This enables clients to benefit from our ability to invest once to serve many.
What types of best practices do you bring to technology development?
As a firm that looks to offer its clients a single code base that is suitably configurable, we are always seeking new ways to improve our service and product delivery. This includes better estimation techniques, agile development methodologies, development operations, automated regression testing and iterative proof of concepts with multiple clients that enables us to test across a broader subset of client data. We endeavor to create an open technology ecosystem that allows clients to extend and integrate their technology infrastructure using Broadridge components across front, middle and back office technology.
Michael Alexander is president of Broadridge North America Wealth and Capital Markets Solutions, with leadership responsibility for all aspects of managed services and technology for equity and options trade processing, business process management, wealth desktop and performance reporting solutions. Prior to joining Broadridge, Mike was senior vice president of operations at Charles Schwab. Mike held senior operations management positions at Pershing, Smith Barney and Shearson Lehman Brothers. Mike is currently a member of the SIFMA Operation and Technology Steering Committee and FINRA Operations Advisory Committee. He has served as a member of the SIA Operations Committee where he was named Chairman in 2006, SIA DMD Executive Board, DTCC Operation Advisory Committee and SIFMA Private Client Operations Committee.