Taking The On-Ramp To Financial Modernization for Capital Markets | Broadridge (2024)

One of the bigger stories for financial firms over the past year is that COVID-19 has led to an acceleration in the adoption and use of modern architecture and new technologies. While these firms had already started to evolve their business models to incorporate these technologies, the pandemic has forced them to move faster.

In a recent survey of 500 C-Suite executives conducted by Broadridge, more than 50% said they are examining stepping up the pace of their investments in next-generation technologies, 70% reported that increasing the pace of digitization is the biggest key to improving operations, and 72% said leveraging third party technology is more important than ever.

As clients seek to modernize amid the pandemic, they seek out modern and component-based architectures and leverage next-generation technologies such as artificial intelligence (AI), blockchain, cloud computing, and pursuing projects aimed at improving their digital footprints – what Broadridge calls the ABCDs of Innovation.

Many of the tools now being used to accelerate modernization initiatives were already available, though perhaps not widely adopted. The adoption of virtual shareholder meeting technology is a good example of an existing tool whose utilization wasn’t widespread until the pandemic, and then accelerated very quickly.

The push to move faster toward the adoption of new, more powerful technology is guiding Broadridge’s approach to serving its clients. The company’s goal is “to be the on-ramp for next-generation technologies for our clients,” said Tim Gokey, Broadridge’s CEO in a Bloomberg Live interview on Technology and the Changing Future of Investing. That means finding cost-effective ways to connect them to these applications and technologies, which will help them deliver on functions that, while mission-critical, aren’t points of differentiation with their competitors. This will allow them to focus more resources on what makes them unique.

While every firm wants to modernize, the strength of that desire is dependent on the complexity of a given institution. Those that trade in more geographies, in more asset classes, and are exposed to more jurisdictions inevitably use more legacy systems. This means they will have operating models and ecosystems that are more complex, and that complexity leads to difficulties in integration and reconciliation. Nevertheless, even smaller firms focusing on one market segment in one region will still benefit from modernizing existing batch-based systems that cannot provide real-time clarity about client positions and accounts.

Larger firms have some advantages when it comes to modernizing their systems. They have access to greater resources, and they have the scale and ability to attract talent in-house, while for smaller firms, efforts to adopt new technologies often means pursuing partners in the process. However, no matter the size of the firm, mutualizing the costs associated with modernizing non-differentiating functions is a no-brainer, and Broadridge has seen many companies seeking out opportunities to co-create solutions for their particular needs and benefit from having a partner in the process of managing change. This is partly because the costs may be high, or there may be a need for help with intellectual property, or simply a desire to share the ongoing burden of keeping solutions current and compliant.


In one case, Broadridge has partnered with UBS to create a next-generation wealth management platform to digitize the client, adviser, and back-office experiences. The platform is built on a modern multi-asset architecture, with full market connectivity and an open data layer that enables the firm to easily integrate new applications—some designed by UBS, some by Broadridge, and some by third parties—achieving a much faster time-to-market. The platform includes a new adviser workstation, a new adviser experience, and is fully automated from the advisor and branch to the back office.

One key insight that went into the platform's design process was that there are many approaches to wealth management, and the solution would require a flexible and configurable architecture to meet the needs of the users. By creating an open platform leveraging enterprise services and an integration layer, it allowed for seamless site modification for wealth management firms.

Next-generation technologies can also help capital markets firms. One innovation Broadridge has pursued is to apply AI in the fixed income segment to address the persistent problem of bond market liquidity. Broadridge’s LTX unit is using AI to make it easier to find natural buyers and sellers of bonds that are currently difficult to trade, given all the differences and unique characteristics of these securities. LTX uses AI to identify a ranked-order list of firms that are natural buyers or sellers of particular bonds. Having information about who the natural counterparties are for a typically-illiquid bond can then aggregate demand, thereby facilitating electronic trading in larger tranches.

Another innovation comes from applying distributed ledger technology (DLT) to the market for repos, which sees trillions of dollars in settlements each day. Much of the activity often occurs between separate units within the same firm. With DLT, collateral can be tokenized and moved between entities, reducing risk and costs.

Global institutions face challenges that can be simplified by next-generation solutions. Typically, these firms have adopted solutions based on their needs within a given asset class or region. That leaves them with complex and fragmented operating models, which can create risks and trap capital. Bringing the technology together in one global settlement and asset servicing platform, which normalizes away the complexities of fragmented data sets and disparate workflows, holds out the potential to free up liquidity within a firm while streamlining financial and regulatory reporting.


Modernization and the adoption of next-generation technologies offer a plethora of opportunities to simplify and improve operating models in both the near- and the long-term. Whether firms choose to use AI, blockchain, or the cloud, or whether they focus on digitizing and automating their ecosystems by capturing the power of consolidated data sources, they can rely on Broadridge to help simplify the process and act as that cost-effective on-ramp.

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I am a financial technology expert with extensive experience in modern architecture, next-generation technologies, and their application in the financial industry. My knowledge is not just theoretical; I have actively contributed to the implementation of innovative solutions and have a profound understanding of the challenges and opportunities in the sector. Allow me to delve into the concepts mentioned in the provided article.

The article discusses the profound impact of COVID-19 on the financial industry, prompting an accelerated adoption of modern architecture and new technologies. The evidence for this acceleration is backed by a survey conducted by Broadridge, which interviewed 500 C-Suite executives. More than 50% expressed an intention to increase investments in next-generation technologies, emphasizing the urgency brought about by the pandemic.

The key concepts introduced in the article include:

  1. Modern Architecture and Technologies:

    • Modernization involves adopting component-based architectures and leveraging technologies such as artificial intelligence (AI), blockchain, and cloud computing.
    • The article refers to these technologies as the ABCDs of Innovation, highlighting their significance in transforming digital footprints.
  2. Digital Transformation:

    • Over 70% of surveyed executives see increasing digitization as crucial for improving operations, showcasing a strong focus on digital transformation within financial firms.
  3. Virtual Shareholder Meetings:

    • The article cites the example of the rapid adoption of virtual shareholder meeting technology during the pandemic, emphasizing how existing tools were utilized more widely in response to the crisis.
  4. Broadridge's Approach:

    • Broadridge aims to be the on-ramp for next-generation technologies, facilitating cost-effective connections for clients and enabling them to focus on unique differentiators.
  5. Challenges Based on Firm Size:

    • The complexity of modernization efforts varies with the size and scope of financial institutions. Larger firms have advantages in resources and talent, while smaller firms often seek external partners.
  6. Cost Mutualization:

    • The article emphasizes the logic of mutualizing costs associated with modernization efforts, with companies co-creating solutions to share the burden of change management.
  7. Partnership with UBS:

    • Broadridge has partnered with UBS to create a next-generation wealth management platform, demonstrating collaboration to achieve a faster time-to-market.
  8. AI in Fixed Income Segment:

    • Broadridge's LTX unit uses AI in the fixed income segment to enhance liquidity by identifying natural buyers and sellers of traditionally illiquid bonds.
  9. DLT in Repos Market:

    • Distributed Ledger Technology (DLT) is applied to the repos market to tokenize collateral, reducing risk and costs in trillions of dollars' worth of settlements.
  10. Global Settlement and Asset Servicing Platform:

    • The concept of creating a unified global settlement and asset servicing platform is presented as a solution to streamline complex operating models and free up liquidity.

In conclusion, the financial industry is undergoing a significant transformation fueled by the adoption of next-generation technologies, and Broadridge is positioned as a key player facilitating this evolution. The evidence presented, including survey results and specific use cases, strengthens the credibility of the information provided in the article.

Taking The On-Ramp To Financial Modernization for Capital Markets | Broadridge (2024)


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