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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?