David Becker: «Transformation is the Primary Growth Driver»
Industry consensus on the need to rebuild some of the most basic infrastructure within financial institutions is becoming the primary driver of growth for the sector, Broadridge’s head of Asia Pacific, David Becker, told finews.asia.
Financial institutions have traditionally lagged in innovation – outside of financial innovations – in even some of the most basic matters such as data input with smaller boutiques still sometimes found relying on scattered spreadsheets created manually. According to U.S.-listed fintech firm Broadridge’s Becker, the industry is undergoing disruption at this most basic level and it is driving profitability for the sector.
«Fundamental transformation at financial institutions is now a primary growth driver, particularly when it comes to infrastructure and technology – some of the highest costs in the sector and a key factor for return on equity,» he said in a conversation with finews.asia, highlighting mid and back-office functions.
Traditional Tech Hurdles
Even in large institutions with an abundant budget and tech talent, historical challenges that have hindered ideal outcomes are often more cultural than technical. Hurdles range from having too many systems, which unnecessarily increase cost and inefficiency; to legacy issues about protectionism and intellectual property. But a wholesale shift in mindset has helped organizations finally turn the corner.
«As a result, they are looking for ways to reduce these costs through improved efficiency, mutualization and, especially at big banks, even shift from proprietary, in-house solutions,» Becker added.
Lack of Transparency
In addition to a late-stage economic cycle that could pressure revenues, Becker also underlines the addition of growing regulatory burdens that, if compromised, also pose real risks to the bottom line.
«A lot of mid-to-back office workflow is very labor-intensive and quite prone to risks,» he explained, also stressing the importance of being able to provide both client-hosted and deployed solutions. «There is exposure in risk management and a lack of transparency when it comes to fulfilling changing regulatory requirements.»
Fundamental Transformation
One area where Broadridge has been able to capitalize on from within the industry’s ongoing fundamental transformation is proxy voting services with a track record of over a decade and $15 billion saved by the industry. Whilst this has mainly been attributable to North America, the firm is optimistic about Asia having acquired over 1,000 issuer clients on its local electronic proxy platform in Japan.
