Innovating the Front Office: The Five-year Outlook for Broker-dealers

INNOVATING THE FRONT OFFICEThe Five-year Outlook for Broker-dealers

Based on research byFIS and Lantern Insights

TODAY

REGULATION REMAINS A KEY CONCERN

83%

17%

YES

NO

All data is sourced from July 2016 survey of 41 front-office executives by FIS and Lantern Insights

An overwhelming number of respondents believe increased regulation will severely impact their business in the next 24 months.

WILL REGULATION CHANGE THE FRONT-OFFICE’S REVENUE MODEL?

SAY

YES

76%

29%

35%

35%

HOW?

INCREASED COMPLIANCE COSTS

REDUCED COMMISSIONSNEW

REVENUE MODELS

THERE ARE WORRIES ACROSS THE BOARDWhich area of regulation concerns you the most?

Data privacy Trade trans-

parency

Capital re-quirements

Solvency and liquidity

Differences b/w domestic & global rules

Reporting Tax Other

29%

20%

15%12% 12%

7% 3% 2%

BUT …REGULATION WON’T

ALWAYS BE TOP OF MIND

THE FIVE-YEAR OUTLOOK

WHAT WILL SUPPLANT REGULATION?

Fintech start-ups (n=16)

Automation (n=25)

Outsourcing (n=31)

Cybersecurity (n=37)

Execution algorithms (n=25)

Mobile services (n=32)

Regulatory compliance (n=11)

Multi-asset technology (n=25)

Blockchain (n=8)

71%

31%

47%

25%

40%

37%

33%

33%

40%

29%

38%

40%

50%

42%

27%

40%

31%

13%

25%

60%

21%

67%

40%

20%

Which of the following trends do you think will be most important to your sell-side business over the next five years?

1st Most important 2nd Most important 3rd Most important

THE FRONT OFFICE IS ALSO FOCUSED ON GROWTH

24%

22%20%

17%

17%

Market expansion will get the biggest increase in investment by 2020.

DISRUPTIVE TECHNOLOGIESFOR COMPANIES

MARKET EXPANSION

REGULATORYCOMPLIANCE

TALENT MANAGEMENT

CUSTOMEREXPERIENCE

THE TECHNOLOGY-DRIVEN BUSINESS

ARE BROKERS BECOMING TECHNOLOGY-DRIVEN BUSINESSES?

SAY YES81%

WHY OR WHY NOT?Skills and technology make the difference – not training or budget.

IF YES IF NO

Other

We have staff with the latest skills

We have an ongoing technology training program

We have the latest technology

2%

25%

31%

42%

Legacy tech-nology

Skills shortage

Budget constraints

20%

20%

60%

We have staff with the latest skills

We have an ongoing technology

training program

We have the latest technology

Legacy technology

Budget constraints

Other

Skills shortage

THE PERSONAL IMPACTHow is technology changing your plans for the next five years within your business?

None of the above

I'm worried about new competitors

I'm expecting to work longer hours

I'm having to do more myself

I'm expecting to change roles more often

I'm working with new departments or across silos

I'm automating repetitive tasks

I'm starting to use new sources of data

I'm learning how to use new technology

2%

10%

12%

15%

20%

24%

39%

51%

51%

WHAT DOES THIS MEAN FOR YOU?

Regulation – especially data privacy and trade

transparency – is still keeping me up at night. And it will

have a significant impact on my revenue model.

Technology will play an important role, whether I’m learning new skills or using

new sources of data.

I will invest in market expansion and disruptive

technology to counter the effect of regulation on my bottom line and to be more competitive.

WHAT’S YOUR FIVE-YEAR

OUTLOOK?