Investment banks are under a lot of pressure to get more efficiencies by simplifying their technology and operating models, according to Vijay Mayadas, President of Capital Markets at Broadridge Financial Solutions.
“Most investment banks out there want to consolidate vendors in a lot of areas across the trade lifecycle,” Mayadas told Traders Magazine.
“The trend is to do more business with fewer vendors, avoid vendor fragmentation, but to essentially mutualize more and more of your front to back trade lifecycle.
“Mutualize means that you can share a lot of the costs around technology investments, around investing in new technologies, regulatory change etc. across a whole bunch of different clients and not take all that cost burden. That’s been a very powerful driver of a lot of our capital markets business over time,” he added.
Last week, Broadridge completed its previously announced acquisition of Itiviti, a provider of trading and connectivity technology to the capital markets industry.
The acquisition significantly strengthens Broadridge’s Capital Markets franchise. It extends Broadridge’s back office capabilities into the front office and deepens its multi-asset class solutions, better enabling the company to help financial institutions adapt to a rapidly evolving marketplace.
The addition of Itiviti’s footprint in APAC and EMEA also increases Broadridge’s scale outside of North America to better serve global clients.
“What’s been exciting after we announced the transaction was the unanimous feedback we’ve gotten from all of our clients that this strategy really makes sense,” stressed Mayadas.
He added that there are many positive things happening in the market around more and more firms embracing the Itiviti technology platform.
“Firms want to simplify across the front to back trade lifecycle, and we can help them in areas like reference data, regulatory reporting, reducing data fragmentation. We’re focused on leveraging our post-trade solutions in conjunction with Itiviti across the trade lifecycle” Mayadas said.
From a technology perspective, Mayadas said that there are three main trends at the moment: modernization and components, data and analytics using AI and highly engineered data; and applying digital tools across workflows to create more automation.
The business model of the sell-side has evolved a lot since the financial crisis. Mayadas said there’s a lot of pressure on continuing to drive efficiencies, find competitive advantage in the front office, and a lot of pressure to invest in technology innovation.
“Given that we’re viewed as a very trusted vendor, we have a lot of scale, we have a very strong balance sheet and a track record around technology innovation” said Mayadas.
“Our belief is that if you can help brands modernize and develop technology on components that are cloud ready, based on the latest technology design principles, you can accelerate front to back simplification. And at a foundational level help them simplify how they handle trade data. That’s a winning value prop for clients,” he added.
In terms of new innovations, Broadridge recently announced the launch of an AI-driven corporate bond trading platform, and will be launching new Repo platform build on distributed ledger technology. “We plan on going live with the first trade next quarter. This platform is getting a lot of interest from the sell-side and now from the buy-side because it positions them strategically for the future in terms of driving next-gen efficiencies for repo trading” Mayadas said.