We spoke to Broadridge’s Head of Global Strategy and US Fixed Income, Vijay Mayadas, at Sibos this year about the decision to expand their Global Post Trade Management Solution with cash management capabilities, technology to watch and their positive attitude towards blockchain.
Could you provide a brief explanation about why you have decided to add a cash management capability onto your GPTM solution?
We launched our Global Post-Trade Management solution in May of this year, enabling firms of all sizes to increase efficiency through a unified platform across all of their markets and asset types. It has been well-received by the market and has already gained three significant strategic signings by firms seeking to streamline post-trade flows across regional markets and product groups. We are firmly committed to an ongoing programme of investments for the solution, and the announced addition of cash management follows just four months after our previous extension for derivatives clearing. Cash management is a logical extension and, by offering a single view of global trades and cash, we believe we can help banks to optimise the use and cost of capital, and manage risk and liquidity across business entities.
What are your thoughts on blockchain?
We’re driving blockchain from the strategy function because we believe that, in the long run, it is really going to change business models. It’s obviously a very interesting new technology but it will impact how our clients do business and how we do business dramatically. We certainly think that blockchain is a game changer and this is because we fundamentally view it as a protocol of trust. Blockchain is probably going through a typical hype cycle right now. However, in the long run, we tend to underestimate how transformative these technologies will be and Broadridge is very much embracing it.
How are you embracing it?
We were one of the first investors in Digital Asset and we work very closely with them. We also recently made a large transaction in the Proxy space, driven by our desire to accelerate our efforts in Blockchain and Proxy. We are also investing in a number of proof of concepts internally and we’re always talking to our clients about blockchain and how we can build these solutions together. I would say that there is a strong interest in exploring and understanding what the technology can do and to collaborate with existing players to understand how the current infrastructure can evolve using blockchain.
What about bitcoin? How is blockchain being received differently?
I think that we always had a view that the blockchain protocol behind bitcoin would, at least in the near term, struggling scaling to support the kind of transactions that we see in our industry today in the cash securities world. What has happened is that since blockchain has become uncoupled from bitcoin, there has been a lot of innovation around the core blockchain protocol and the performance issues that we felt would be a hindrance to the technology are getting solved at a rate that is exceeding expectations.
Which companies in particular are doing this?
Digital Asset has made great strides in adapting the technology to support high transaction throughputs.And there’s been a lot of investment by startups and even large enterprise technology companies, like IBM, Amazon and Microsoft, to fund the re-architecture of blockchain in order to enable it to supporthigh throughput transactions. Based on what we’ve seen in the last 12 months, our own view around the timing of blockchain adoption is still conservative, but we’re probably more bullish than we were before.
Is it essential to have people experienced in both the financial and technology industries employed in fintech companies?
I think we do need people in the fintech industry who are experienced in finance and in technology, because Blockchain, for example, is a complex technology and it is challenging to understand how to implement it and change the way the industry manages critical, complex processes. We need people who can work closely with banks and can help to reduce the risk of adopting such a novel technology- it helps to have a combination of product management, innovation and domain experiencein capital markets fintech so you’re very attune to the risks being introduced into the system. If you’re going to innovate using a disruptive technology, there needs to be a very well defined path and you need to work closely with clients.
What about AI?
We’re pretty early on in our exploration of artificial intelligence, but we do believe that after watching the industry undergo decades of false starts, failures and disillusionment, AI’s time has come and we look at two data points to validate that hypothesis. One is that earlier this year, the US government approved the software in the Google self-driving car to act as a legal driver, and the second was the defeat of the world champion of Go by DeepMind. This is something that AI scientists predicted would be an event that would happen 10 years from now, but it happened a lot sooner.
What’s the next step for Broadridge in relation to artificial intelligence?
We’ve thought long and hard about what these two events mean and we concluded that AI has got over a lot of the hurdles which hindered it in the past and a new type of machine intelligence is evolving. Of course, a lot of what we do is using data to improve the efficiency of how things gets done and AI, we think, is a great way to accelerate and automate that. What we’re doing at the moment is looking at a range of processes and running experiments on them to find out if there is a significant saving relative to the manual work.
What other disruptive technologies are you looking out for?
I would say that blockchain and AI are probably the big ones for us right now, but of course the big data platform that we are building in our Global Post-Trade Management solution is something that our clients are very interested in, and an area in which we will continue to invest. Cryptocurrencies are another example, and while the path to mainsteam adoption is highly unpredictable, when big banks start to adopt them and people start to use them as a way of exchanging value, there will be a requirement for technology to support them.