Neha Singh: Hello, everyone, and welcome to our webinar on the state of digital transformation in financial services. I'm Neha Singh, head of Post-Trade Transformation and Strategic Products at Broadridge, and I will be moderating an exciting session today with our panelists who are senior industry leaders. Our session will focus on digital transformation. And in our 2025 study on this topic, we found that financial firms are ramping up their transformation efforts, but they face the challenge of implementing these changes in a rapidly evolving environment while dealing with the limits of legacy technology. All these forces are colliding and they're creating a sense that transformation strategy is not moving fast enough. Over 40% of firms in our study felt this way. So over the next hour, we will focus on themes that are critical for transformation in today's world. data, AI, resilience, distributed ledger technology, and more. And we will share insights from our study and hear from our panel to get their real-world perspectives and strategies for success, and hear from you, our audience, through a couple of polls. So stay tuned for those. Before we jump in, a couple of housekeeping items. At the bottom of your screen is a Q&A widget, and we encourage you to type your questions in at any time, and we will try to cover them towards the end. And after today's webinar, you will receive an on-demand version of the session and a report with our study findings. So with that, let's get the show on the road. Joining me today is an incredible panel of four industry experts who will share their valuable perspectives on key aspects of digital transformation. Welcome and thank you all for being here. I'm going to ask each of you to introduce yourselves, but with a twist, please include a fun fact or something that people don't know about you. Steve, we'll start with you.
Steve Byron: Thanks. So hi, everyone. I'm Steve Byron. I'm head of ops tech, cyber and business continuity at SIFMA. Prior to SIFMA, I spent 24 years within operations at Goldman Sachs. So my fun fact is that one of my kids, Jen, has set up a balloon making business for balloon animals. Busiest day of the year is July 4th for her. So we're in peak practice mode at the moment. So our house is completely covered in red, white and blue balloon dogs at the moment. So everywhere you turn, there is a balloon dog or a balloon sword. So that's my fun fact.
Neha Singh: Oh, that's wonderful. And such a talent, balloon making. I love it. Thank you, Steve. Mike?
Mike Daugherty: Hi, everyone. I'm Mike Daugherty. I'm a managing director and head of product operations at Morgan Stanley Wealth Management. And I'm really pleased and happy to be here today to share some insights. I guess my fun fact is I was based in the UK for three years, and I filled up an entire passport and then some in my travels around the globe. So I think I'd Our latest count was at somewhere around 40 cities and countries. So very proud of that fact. And I got my credentials as a world traveler during that period of time.
Neha Singh: You're giving me life goals, Mike. That is amazing. Thank you. On to Jamie.
Jamie Healy-Waters: Thank you, Neha. Hi, everyone. My name is Jamie Healy-Waters. I'm a managing director at Citigroup. I am in the markets operations team. I've been here for 16 years. And prior to that, I was 10 years at Lehman Brothers. And I guess my fun fact or not so fun fact could be that I was at Lehman Brothers at the very end. and worked all over the weekend when we went bust. I don't know if that was very fun. Apart from that, my other one would be that I've traveled to over 30 different countries and I hope to make that at least 34 by the end of this year.
Neha Singh: That is brilliant. I think we have a very global panel here, I can see. And Jimmy, I was at Lehman as well, but before the financial crisis. All right. And last but not the least, Colin.
Colin Parry: Thank you very much for having me. Colin Parry, I am the CEO of the International Security Services Association. We're an association which deals with the custody and asset servicing value chain. from the custodians all the way through to the CSDs, and we're truly global. We have members from New Zealand all the way around to Chile, but I don't think I can compete with the other two on their travels. But my fun fact is I have four children, three of whom have been born in different countries, so I'm spreading the wealth that way rather than going myself. All with the same wife, but they hasten to us.
Neha Singh: Important to clarify. But yeah, I mean, I feel like there's a whole global theme here that's all coming together. So thank you. Just a quick introduction to the study. As I mentioned, we'll be sharing insights from our 2025 Digital Transformation and Next-Gen Technology study. This is on the following page. So this is our fifth iteration of the study. It captures perspectives on major trends in financial services, from over 500 C-level and senior executives across 11 segments globally. So it fits with our very global background that we have with this panel today. So on to our first question, which is a poll question for the audience. So you should see this come up. So the question is, if you had a magic wand to accelerate your firm's digital transformation, what would you ask for? And you should see the poll on your screen as an audience member with a number of options. Please pick an option here. I will give you a few seconds to get your responses in. Okay, so I see some responses coming in. It's going up more rapidly now. Good. Let's get those fingers moving. We have a good percentage now. Just a last few seconds for you guys. Okay, last chance to get your thoughts in there. All right, so here are the poll results. So I think I just have to scroll a bit to see. Oh, I think it's still going, is the poll. Let's close the poll and look at the results. Okay, so the number one option is the single platform for front, middle, back office, followed by cyber attack immunity. And then the third one that we see is single data source for the firm. Fabulous. That's really interesting because now let's look at the results from the study. And we actually, you know, when we asked the same question to financial services leaders on what they would like to accelerate digital transformation, we had the same top response as the audience polls. So a single platform across front, middle, back and asset classes and functions. And I thought it was interesting that cyber attack immunity came came up as number two. And then we also have the commonality of a single source of data for the firm. So in our study, that was at number three. So quite a bit of alignment. And I also see the cyber attack immunity top of mind. So it's a good thing. We'll be talking about resilience as well. Now let's hear from our panel. So if you had a magic wand to accelerate your firm's digital transformation, What would you ask for and why? Jamie, let's start with you.
Jamie Healy-Waters: sure thank you i think my what i would like is slightly less extravagant as the answers that were there so i guess firstly really simple i would like to speed up the delivery time for transformation so reducing development timelines improving code quality and having more end-to-end testing end-to-end testing i'm sure everyone can relate is usually a nightmare and depending on the size of the program you're trying to deliver there's always problems secondly If everyone had a magic wand, I'd like more transformation from an industry perspective. So especially with the reg that we're expected to deliver at the moment, especially as we move into T1 in the UK and Europe, I'd like to see more trade execution onto electronic platforms. I'd like to move more clients onto electronic confirm matching. I would like to expand industry utilities like pre-matching. a pre-settlement match in um and i would love less bilateral settlements so move more of the risk that we see day to day into clearing houses um and finally i think again probably resonates with everyone but there's a constant battle between regulatory deliverables that have to be delivered there's no way around them and then budget for discretionary work i'd like to see a lot more budget for discretionary work and i'd like to see more budget go to innovation
Neha Singh: Thank you, Jamie. I love how you turned it from one thing to several. I love it, by the way. But that is a very practical, hands-on perspective. Thank you. And very generous. You asked for a magic wand for everyone. That is brilliant. Thank you. Mike, what is your perspective?
Mike Daugherty: Sure. I would say that I would probably have selected the data, a better, more unified source of data that the entire firm could access. I think a single platform would be an interesting proposition. I think it would be a little harder to pull off. And I think a firm, particularly a firm as large as Morgan Stanley, to try to have it on one you know set of rails platform wise would probably be a little bit too much to ask so i think the data enables us to deliver everything that we really need to deliver for you know our clients right so if we know a client across the franchise some of the initiatives that are very big at morgan stanley right now like our integrated firm initiative They become easier because, you know, we have one single view of a client. You know, we know if you're a high net worth client as well as the CFO of an organization that we're doing business with on the institutional side or the stock plan side, et cetera. So I would say that the data enables us to be a little bit more commercially on our front foot and commercially oriented because it's a single view that, you know, we can then talk to our clients about the full gamut of financial services.
Neha Singh: That's great perspective. Thank you for sharing the example from your firm, Mike. That is very helpful. Steve, what would you ask for, I guess, taking an industry perspective?
Steve Byron: Yeah, thanks. So I think from my perspective, I'm kind of building on some of Jamie's comment. I think we hear from a lot of firms that the majority of their engineering budgets are actually spent on non-discretionary work. So a combination of keeping the lights on, delivering regulatory compliance or regulatory-driven change versus spending on discretionary work like innovation. So I think the change in the U.S. leadership approach This year, as well as changes at the SEC, I think previously at the SEC, we were in a period of unprecedented rulemaking, coupled with much shorter implementation dates, which put a lot of pressure on the industry to be able to comply. So I think with the shift in SEC leadership. more of a focus from this administration on deregulation, we may see over time a reduction in time being spent on reg-driven change. I do think that firms have, though over the past couple of years, really taken advantage of some of that reg change to drive forward their modernization agendas. So aligning automation and data strategies with actual regulatory outcomes has been successful for a number of firms in terms of being able to get that work prioritized. And we certainly saw with the U.S. move to T plus one that firms were able to accelerate automation in their post-trade, reducing exception levels, cleaner affirmation and settlement processes by coupling modernization work with regulatory change.
Jamie Healy-Waters: I love that. And it's definitely going to be doing that again with UK, T1 and Europe.
Steve Byron: And the treasury clearing. And yeah, the list is long.
Neha Singh: People's fun is not over. That is really important to remember from a global perspective. Right. And Jamie, you're you're living and breathing all of that exciting work pain.
Jamie Healy-Waters: Yeah. So I'm the markets ops lead for U.S. Treasury clearing, but also UK T1 for sorry, T1 for UK and Europe. So we're going through the same process again. Right. For T1 specifically, what we didn't automate globally for U.S., We're now looking at the specifics of European and UK nuances and exactly what Steve said, how we do that again, how we carve out all of those things and get them in the tech budget, the reg tech budget for 2026 for delivery.
Neha Singh: And I love the approach of saying, yes, we have to do this, but how can we actually drive modernization and transformation at the same time, which is a great perspective. And yeah, I think we have a great wish list so far. If only we could get our hands on this magic wand and get going. And Colin, would love your perspective.
Colin Parry: Yeah, I'm going to agree with Mike actually on the single source of data. Certainly just in the microcosm, which is ISA, moving all our databases onto one cloud-based platform made a huge difference to our firm, right? And it's It's not as complex as the big banks and custodians, but it's a microcosm. But I think that also gives you two things, which I'm taking Jamie's approach now, mashing things together. I think if you've got a single source of data, it makes that regulatory compliance so much easier and makes that easier to deliver. You've got... proof that the data is coming from a certain place, it's been validated, et cetera. And the other thing it allows is it allows you to deliver the personalized experiences because you've got the one source of data. So, you know, as we roll out AI and all the rest of it to help us applying that to a single database, I think probably covers four of the aspects here. And so I'm taking a combination of both Mike and Jamie's work, so I'm sorry.
Neha Singh: No, that's wonderful. And I think we're converging on some of these insights in terms of how our audience can think about transformation. And this is actually a great segue to the next topic I'd like to explore, which is data transformation. And exactly as you said, Mike and Colin, if you look at any aspect of transformation that is top of mind today, regulatory, AI, customer experience, resilience, data transformation is that common thread that enables all of them. If you don't have the right data, if it's fragmented or inconsistent or low quality, then the transformation effort cannot reach its full potential. And in our study, we saw nearly half of firms struggle with data silos, 40% face data quality challenges. So Mike and Jamie, I'd love to get your perspectives and go a bit deeper on this. So in your experience, what is the role of data transformation in driving digital transformation? And how can firms address the data challenges that they are facing? Mike, let's start with you.
Mike Daugherty: Sure. So, I mean, I think it's obvious to a lot of the folks on the meeting today that data is the foundation of everything that we do here. We're only as good in our delivery mechanisms as our data enables us to be. So I think fixing and streamlining the pockets of data around any large organization is absolutely mission critical because, again, I've been involved in situations where the data quality across parts of the firm has been weaker, not here necessarily, but I've seen that and I've also seen what we've been building here at Morgan Stanley over the last couple of years. you know we really have turned a corner i think in in terms of getting rid of those silos getting rid of those pockets of data and actually thinking more like as i mentioned before the integrated firm so so i think we're you know we've gotten the joke i think a lot of the larger companies have gotten the joke that the investment in The infrastructure, the delivery mechanisms, the data warehouses, you know, that's really helped us, in my mind, you know, transform the way we're approaching our delivery because it's enabled so much better.
Neha Singh: Thank you, Mike. That is very practical advice for our audience to take away. Jamie? Jamie?
Jamie Healy-Waters: and i agree with everything mike says so i'm not i'm not going to repeat what what he said because i've a very similar answer but what i would say is um at city we are very focused as a firm on data governance and i think one of the challenges we are focusing on is obviously the quality of front-back processing of data but More importantly, I think the ownership of data and making it clear where accountability sits for us. And I think that there's been a very gray area in that in the past, and that hasn't helped with the whole data simplification. So for us, it sits with the business, and that includes operations. So looking at it from an operational lens and not assuming just a tech oversight. If we have bad data, then it interrupts our day-to-day. we should absolutely care about it and own it. It also helps our strategy within markets ops in making sure we are embedding data awareness and business intelligence into our teams and looking for ways to utilize our data to better service our clients and for obvious control enhancements. I think by having clear rules around accuracy, timeliness for each of the critical data elements that we have, we can leverage our data for continuous process improvements and ensuring our ops teams evolve and move away from manual processes and get to do more exciting things outside of the monotony of having to fix things that just don't work.
Neha Singh: No, that is a great perspective, Jamie. And it's just, you know, it's going back to the basics, right? We get this right. There's a whole host of things that It enables that we can drive, that includes AI, that includes regulatory compliance, as we spoke about. And then we can, as you said, really focus on these exciting developments that we are seeing in our industry today. Thank you for sharing that. Now, let's talk about the technology that has exploded in the last two years, to put it mildly. It has the promise to infuse everything that we do and become ubiquitous, like the smartphone and the Internet. Gen EI, of course. So Gen EI is showing the fastest growth in investments. 72% of firms in our study said they're making moderate to large investments this year, up from 40%. So a quick-growing area. And two-thirds of financial services professionals believe the greatest impact that Gen EI will have is on employee productivity. Let's see what our audience thinks. So this is time for a second poll. And the poll question is, in what areas are you using Gen AI tools today? So you should see a number of options here. Please pick any that apply. And again, I will give you a few seconds to get your results in here. This should be easier now that you have done it once, you are pros. I know there are more options, so there's things to think about here. Okay, I see the responses coming. We are at 43%. Let's get a few more responses in. Okay, 51%. Just last chance to get your thoughts in there. All right. Now we will close the poll and look at the results. Okay, so looks like the winner is note taking meeting summarization at 25%. And then we have two of them at 14%, investment market research and software development. as the next highest. And then honorable mention for data analysis, visualization, and internal comms. Very interesting, but it does highlight the whole employee productivity with the note-taking and meeting, summarization being the top use case. Let's now look at the results in our study. So when we surveyed financial services leaders on what they use Gen EI for, the top responses were investment or market research, meeting summarization, and data analysis and visualization. So very, very consistent with what we're seeing in the audience today. And now let's get our panel to weigh in on Gen EI. So my question here is, where in your firm are you seeing quantifiable benefits of Gen EI today? And how do you think GenEye can accelerate digital transformation? Mike, let's start with you.
Mike Daugherty: Sure, thanks. So I think we've seen it be high impact in a couple of areas. I think our call center, certainly for the call summarization that was mentioned, I think that's very, very helpful for us. It takes our representatives out of the business. logging of the call type and the call request, the actual request that they were talking to the client about, so they don't have to do that manually. And that obviously takes up time as well, too, from an operational efficiency standpoint. We don't have to do that anymore. So that's a benefit. I think we've also seen it have some very good impact in our our ability to replace some of our natural language search engines. So our financial advisors and our assistants have the ability to utilize our internal platform to actually get information in a cleaner way, a crisper way, a more comprehensive way than it did in the past. So that's been helpful. We're starting to scratch the surface on some of the intelligent document processing space. So the ability to read large documents like Trusted you know, other large contracts, et cetera, that really you're just looking for the five or six key provisions, but you don't have to get through an 80 page document. The AI can do that for you. And then I selfishly, I take a large amount of research requests into my organization every year. So I'd love to have the ability to have the AI capture that information and actually make the research time for my, my, and cut that down from 20 minutes to 8 minutes or from 12 minutes to 6 minutes, you know, that's a huge benefit to us. So we're starting to kind of lean into a lot of that type of work, and I think that that is the acceleration of our transformation. We can fix a lot of that stuff that's very time-consuming and task-oriented, you know, and let the system do that work for us. I think that, by definition, will transform us.
Neha Singh: Those are great practical examples, Mike. And just to probe a little bit more, maybe in one of those examples, could you give a flavor of the type of benefit that you've seen, like a percentage decrease? At what levels are you seeing those benefits? That would be very, I think, helpful to understand. Yeah.
Mike Daugherty: Yeah, I mean, I think as it relates to the calls and the summarization of the calls, that saves at least 30 seconds per call. And when you're taking millions of calls a year, that's a game changer. And by the way, that same technology of summarization can be used for meetings. So FAs, when they're sitting with their clients, you know, they have the ability to let the system do the debrief from that meeting. So that saves, you know, the advisors and the assistants, you know, many, many hours worth of work in a given month, right, just kind of recapping phone calls and expectations with their clients. So, you know, the benefit can be very significant, no doubt.
Neha Singh: That is very helpful insights, Mike. Thank you. Jamie? Hey, Jamie. Oops. No, I mean, yes, I can hear you now. Go ahead.
Jamie Healy-Waters: OK, sorry. I was just going to say the good news is I was at an advisory committee meeting yesterday and the meeting hosts the sell side, the buy side and custodians. And largely we were all in a similar ballpark in terms of initiatives that we're working on as the answers that we saw in the poll. So that's good news. I guess some of the smaller use cases that we've already gone live with and we went live with earlier on were in the fails prediction phase. So calculating the likelihood of a trade settling or not and then how we would react to that. and then also creating penalties, predictions, sorry, around penalty costs so that we can ensure that focus is placed on the most expensive fails as a preventative measure. We're now focusing on the extraction of unstructured data. So for example, invoices, brokerage, and emails. And as an example on emails, our ops teams at Citi, we don't use Outlook. We have an internal email workflow tool that sits over the top of Outlook. And what that does is it enables us to do many things. We're able to prioritize queries. We're able to route queries to the right place, cut down on email traffic, raise escalations. But one of the features that we're working on is email response and how we automate that. i mentioned this in a in a in a session i've been on before but email volumes are only ever increasing and with the help of the tool we use we're able to assess how many emails we receive and who they go to and who gets duplicative emails that they don't need to receive markets ops at city receives over one million emails a month and that's increasing by eight percent a year on average um we've been working to improve the efficiency of email processing but also using ai to ensure emails reach the right people and only the right people. We identify the intent of the email, help the teams prioritize effectively, and then also aid them with a response to the client. Still a lot more to do on that in terms of being able to release that without it being checked by a person, but we're working on that. We've also gone live with matching of confirmation affirmations using AI. And we've got several more projects in flight that are similar or on our book of work waiting to be prioritized in that capability. All of this helps again with creating efficiencies and helping with our risk and control environment. Moving forward, and this is in an early phase, but we're starting to think about agentic AI to actually replicate the thinking and reasoning of individuals in our teams. And this is very taboo. who process exceptions and answer queries. And again, there's still a lot of work to do in that space. But we are making sure we have the data available to build and teach the models. But obviously thinking about the approach and the controls and the approvals and everything else that comes with that. So more to come on that.
Neha Singh: Yeah, love the real world use cases. And, you know, I don't know anyone who loves email. That is certainly, you know, a key one for us to be solving. Thank you, Jamie. Steve?
Steve Byron: There's a couple of things I'll add on here. It actually came dead last in the survey, it looks like, around software development. But I think this is an area that you're going to see Gen AI play more of a role as kind of forward-looking. And you're certainly already seeing examples of firms using AI and Gen AI for coding mainframe to cloud migrations. So if you think back two or three years ago, there was – a lot of concern within the industry, both around obviously, you know, tech risk around mainframe architecture, but also finding talent in the industry who are still able to code in COBOL. And you were looking at multi-year, multi-million dollar projects to transition off mainframe onto sort of more modern architecture. You know, fast forward to today, and you're seeing examples of AI rewriting projects COBOL code into modern languages and then engineers actually just reviewing that output versus actually having to write the code to transition. So that is actually a game changer for firms as they kind of look at that types of transition. It substantially de-risks the migrations, reduces the time spent on these large modernization builds. So that's an example of how firms are deploying AI on a technology or software development side. I'd say one of the areas I think is fascinating to me around AI is kind of building on Jamie's point a little, is around the talent management side of AI. So as firms are deploying AI into their workforce, you know, how do you train people in the organization, A, to use AI, then, you know, what does that role of the future look like? Is that, you know, more governing output, right? Are the people looking at AI governance? Are they monitoring the output from the models? Are they having to run validation on them and really understand if there are issues? How do you bring somebody into the firm as an analyst and progress them through an organization? when they're no longer doing that processing work that historically has been done at firms where firms have a very heavy culture of apprenticeship, right? How does that apprenticeship model kind of develop in a world of AI? So I think there's a lot of opportunity there. I think there is also a lot of open questions that still need to be worked through in terms of how organizations transform to accommodate AI.
Neha Singh: That's a great perspective, Steve. And, you know, AI is as much a transformation change effort, right, as it is a technology effort with just an evolution of what our roles are going to look like, right, going forward. Thank you. Colin?
Colin Parry: Yeah, I'd only add that I think there are opportunities for the digital transformation side with combining AI with some other technologies such as Snowflake. And I think where that allows you to go is sort of touching on Jamie's point, is not only understanding what the queries have been raised in your emails, but then eradicating the source of those queries. So can you then give the clients real-time dashboards to what you can see inside? Because a vast majority of queries that seem to be coming in appear to be those ones what I call human as an API. i.e. somebody sends you an email saying, what's the status of this trade? And those don't need to be dealt with by humans. How do we automate that? How do we give, as Jamie sounds to be doing, automate the responses to them or give people access? So I think it allows you to think differently because it can give you different insights into the data, especially when tied together with things like Snowflake and similar technologies.
Neha Singh: Yeah, it's not just the technology standing on its own, but also its interaction with everything else that's taking place right now. And I love humans as an API. That is a great illustration of what we see sometimes. Okay, so let's move on to a topic which is clearly top of mind for firms today, operational and cyber resilience. We have a perfect storm of higher volatility, shorter settlement cycles, and growing risk from cyber bad actors that have made resilience a critical priority for the industry. Almost 90% of firms in our study are planning material investments in cybersecurity this year, and it's no longer a conversation about if a cyber event will happen, but how prepared firms will be when it does. We do see legacy technology continues to be a key bottleneck and nearly half of firms in our studies say that outdated systems are limiting their resiliency strategy. I'd love your perspective on this. Just given the evolution in the cyber threat landscape and how critical operational resilience has become, How can firms ensure their resilience while driving transformation? Steve, let's start with you.
Steve Byron: Yeah, thanks. Look, I think it's obviously we're living in a time where there's a constantly evolving threat environment. We've certainly seen an increase over the past few years of state actor activity, which is only increasing with sort of changing geopolitical landscape that we see today. So firms need to stay vigilant and they need to ensure that the basic hygiene measures is maintained if you look across the industry the last three examples we've seen in the past couple of years where a bad actor was able to penetrate firms defenses was predominantly driven by the fact that their systems weren't kept current available patches weren't rolled out so getting the basics right in cyber is very important I would also add, as we're talking about modernization and transformation, as firms drive transformation, they undoubtedly face a question of, you know, do I build or do I buy? And if you go down the buy route, then you're also adding third-party cyber risk to your ecosystem. And we're certainly hearing that a lot more frequently. over the past sort of 18 months or so. So firms need to understand their interdependencies with their vendors and their service providers. They need to understand how their firm would be impacted if the vendor had an outage and what their plan B is and test for that. they need to understand their third party's resilience and cyber capabilities and ensure they're comfortable. From an operational manager perspective, you need to be thinking through that in the case of a cyber event, normal service is not going to be resumed in hours, right? It's likely going to be weeks, if not months, for that third party to come back online. So it really highlights the need for firms to test and understand what their third party capabilities are. Um, I would say, though, that the flip side of obviously transformation, what it also brings, moving from legacy technology onto more modern technology, that tends to come with better, faster recoverability functionality. You're building scale into your architecture. So it does mean that you can manage through these resiliency events in a better form than you are if you're on legacy architecture. So just some thoughts there.
Neha Singh: That's very helpful, Steve. And I think your highlight on third-party cyber risks, I know this is a big focus for FINRA in the U.S., you know, that's something DORA calls out as well, and especially the importance of testing ahead of time and working, you know, with the third parties and your internal teams to make sure you are all prepared for such an event that would make the difference in the recovery time here. Thank you. Colin?
Colin Parry: Yeah, so I agree with what Stephen said. And there's a couple of things that have come to light recently. So, one, we did some work with what we call the domestic CISDs, i.e. people smaller than the EuroClears, DTCCs, et cetera, but those based in Africa, South America, and South Asia. And their biggest concern was... resilience because quite often you have a power outage and particularly South Africa where they have the rolling blackouts but not only that you do you have that but you have a power a petrol shortage so you can't run the gasoline generators etc so they were thinking about how they do this on multiple fronts to build the resilience and quite often it was well actually if they go to a third party provider a cloud provider they get more resilience built in, which is abroad. But one of the challenges was then the local regulator saying, actually, it's all going to sit here in South Africa or here in Ghana. And how did we overcome that? Well, they overcome that. So that's an interesting view. And so whilst I agree that the, you know, door is very European centric and that The GDPR rules are very European centric, but that almost stops the resilience being built because you've got a confluence of regulators who are looking at privacy against those looking at resilience in the financial services. And the aims aren't always the same. So I think I think that's an interesting problem to deal with. The other thing is we have the symposium every other year at ISSA. And we had a gentleman from UBS who was there, CISO, come in. And he was saying that one of the things that they learned most through their resilience and their digital transformation is understand what the real crown jewels are of your firm. i.e. what are the things you cannot live without? Because actually you've got a massive amount of infrastructure, and most of it, it doesn't matter if it's down for a day or two. And as Stephen said, it may take more than a day or two to recover. But basically you build your protection the most around the things that are most important, and then some of the things around the outside you're less worried about and you spend less money on. And the third point, again, going back to Stephen's comments about third-party providers, ISSA has actually written the Operational Resilience Questionnaire, because what we're seeing is many firms have been asked by other firms, like, show us your resilience, your capabilities, et cetera. And they're doing that in a very unstretched way and, you know, multiple questions. So what we've built with a number of industry players is, is effectively a questionnaire that you can use. And if you fill it in once, you know, Citibank come and ask me what I'm doing, or Deutsche Bank come and ask me what I'm doing, or DTC do, I can just turn around and say, well, here are all my answers. And maybe each of those companies has one or two extra questions, but you've got the core base to use. And that, the efficiency of all these questionnaires is, relies on the network effect. So I would ask people to use it where they can. I think it's applicable for all the financial services. We built it upon the BIS principles. And, you know, the biggest firms who are also members of this are the ones driving that.
Neha Singh: Great. Well, everyone has some homework. Please look at the questionnaire that can actually help you practically with your operational resilience. Colin loved the point on we're only as strong as our weakest link, and we do have to look at resilience as an industry given our interconnected nature. Thank you. Jamie, I would love your perspective more from a business view on operational resilience.
Jamie Healy-Waters: Yeah, sure. So coming at it with an operational lens on, we've certainly spent a lot of time looking at global process and procedures and how we can align them better within all of our teams in markets ops. Transforming our platforms has firstly been key to help achieve this. as an example in the cash middle office space and settlement space to ensure we have common new eyes and our front to back recs align, our controls align, eliminating regional nuances per product. It just means that we are easily able to ensure we have a follow the sun model, which is key for resiliency and a handover between regions becomes easier We certainly saw this with the rollout of US T plus one. In cash securities, in middle office and settlements, we didn't have to hire anyone globally for T1. One, because we automated a lot, but two, because we can transfer processes region to region. Clearly, it also helps when faced with disruptive events. Our operations can remain intact because we're easily able to hand over processes I made that sound really simple, and it's not. We've still got a lot of work to do, but that's the plan in terms of think about operational resilience as we build out our platforms. I think it's key that resilience has to be built into transformation, embedding cybersecurity, continuity planning, failover strategies into change programs, and not just trying to bolt them on afterwards. It doesn't work, and the horse is already bolted at that point.
Neha Singh: Absolutely, Jamie, I love that perspective. And it really underscores the need to think about this holistically, right, as opposed to they're all separate pieces that they all need to really come together to drive transformation. Thank you. So let's now talk about blockchain, distributed ledger technology, and digital assets. In our study, we see firms are increasing investment in these areas. This year, 71% of firms are making moderate to large investments in blockchain and DLT, while 64% of firms are doing the same in crypto. Both actually increased year over year. Going a bit deeper on the data on the following page, The survey shows that nearly half of firms expect significant adoption of blockchain and DLT and new opportunities created as a result. And they expect broader accessibility and rising relevance of cryptocurrencies. And this crypto enthusiasm has only accelerated in the last few months with this massive shift in policy in the U.S., which favors regulatory clarity and innovation. And this will drive more advancements in the blockchain and DLT space. My question here is just given how rapidly the blockchain and DLT landscape is evolving, when do you think we go from here? And what are real world use cases where DLT can help drive digital transformation? Colin, let's start with you.
Colin Parry: I go back to my first answer to the first question, which is single source of data. I'm a fan of the intellectual underpinnings of DLT and the fact that you can get a single source of data, not only within your own firm, but across everybody involved in the transaction. And that would be a wonderful thing, right? But I'm also, I've had Jamie's job for a number of years. I'm also cynical about the ability of changing the industry in a massively short period of time. So I think we need to look at our use cases and pick the right ones. And we've just done a survey on DLT, which will come out next week. The results will come out next week. But one of the strong use cases coming out is the collateral one, including the DLR belonging to yourselves at Broadridge. And there are others out there, be that D7 or others. So I think that's a strong use case which can transform what we're doing. I think private markets needs a solution. And that, again, would be a good solution for private markets. Maybe that becomes a country specific one rather than the global one. And then the other thing that I think we need to source out is what are we doing about the cash elements? because we need a fungible cash solution. And I'm not quite a believer yet in stable coins issued by individual banks, because as Jamie alluded to with the Lehman's crisis, that gives you a different set of risks to central bank money and DVP-1. But those are the ones I'd raise.
Neha Singh: Thank you, Colin. Very sort of practical examples and real-world use cases where, you know, a distributed ledger technology can actually drive a difference. Steve?
Steve Byron: Just build on Colin's response there. So I think, look, in terms of landscape, it's clear from the survey that we've kind of passed a tipping point in terms of firms looking at DLT, digital assets. We've certainly seen in the U.S. a change in posture from regulators. moving to a very pro-digital asset and crypto posture. From a SIFMA perspective, we've been working very closely with our members to develop and advocate for positions that support the sort of broader adoption of digital assets. In addition to the focus on digital assets, which are not securities, so your Bitcoin and Ether, the regulators have moved very quickly to remove many of the barriers that prevented firms working with tokenized securities. So I think that change in regulatory landscape has removed a lot of hurdles that firms were dealing with in terms of looking at where does this go now. I think, you know, the expansion of tokenized securities certainly is one area that I think we will see develop pretty quickly. You know, I think there's a lot of, I'm seeing a lot of upsides there in terms of potential sort of automation that can be driven through the tokenization of assets. I think to Colin's point, enabling faster collateral models, the product that Broadridge has around repo. So there's a number of use cases that are out there currently that work. Last year, SIFMA ran a project called the Regulated Settlement Network, which really explored how tokenized cash and securities can be used to support new settlement models. And we also looked at how that could operate within the current system. or the existing legal frameworks that existed last year, and that successfully was piloted back in November of last year. In terms of what we need to see, I think, on the forward, you really need to see – further definition or further formalization, I'd say, of the payment stablecoin landscape. So I think once you have that established, once you have an ability to move cash in a tokenized form or stablecoin form, I think that then enables firms to start to accelerate that tokenization of assets because it enables faster fund transfer.
Neha Singh: Thank you, Steve. And there's certainly a lot here for the industry to get together and solve, right, in terms of how these different models can work and really enable the real world benefits, right, that we are looking at from distributed ledger technology. Thank you. So I think let's spend a few minutes on Q&A. I think we have time for a couple of questions. And if you haven't yet already, please enter your question in the Q&A widget. So we are able to cover that. So I see a couple of questions here. Let me start with this one. What are the challenges with transformation that you have seen? And could you share some tips to combat that? Jamie, Mike, do you want to share your perspectives here?
Mike Daugherty: Sure, I can start. I think for us, transformation, I don't know if it's been a challenge. I thought it would be more of a challenge than it's actually been in terms of some of the desktop automation that we've deployed to our teams. In addition to our traditional tech dev, we've got a very robust ecosystem now around desktop-driven, user-led development. So sometimes with the assistance of technology, proper, sometimes not. But that's really, I think, been a huge empowering tool for our teams. And it's actually very, very... productive and very, I would say, additive to us as we go through time. And we actually measure our savings in terms of hours of productivity that we are saving by delivering the technology. So what I thought was going to actually be a pretty big challenge in terms of getting our folks to actually drive development. And by folks, I mean our operations teams. You know, it's actually been very embraced right from the get-go. And our hours that we're saving accelerated dramatically from last year, which was our first year at it, to this year, which is, you know, coming back for our sophomore year, you know, we've delivered some excellent work. And the number of hours that we've been able to lop out of the system has just been dramatic.
Neha Singh: That is very inspirational, and it sounds like you've created the right setup and model around this to make sure your teams are rallying behind the transformation and sort of seeing their own success within that. That's great, Mike.
Mike Daugherty: And we put very, you know, robust governance and guidelines around it as well, too. So it's not just a, it's not an open season for doing kind of whatever you want. There's very strict guidelines to it, but the teams understand the rules and they're delivering at a very robust clip at this point.
Neha Singh: That's brilliant.
Jamie Healy-Waters: Jamie? I'd say, first of all, I mean, I touched on it earlier, budget, right? Having all the budget we need to be able to do everything we want to do impacts and is challenging for transformation. Prioritization. So there's so much to do, whether it be strategic builds, business discretionary, regulatory, low-code initiatives, changing the manual touchpoints, getting rid of EUCs, data transformation, whatever it is, there's there's a bit of change fatigue and volume pressure and a lot of the smes are always the same sme so everything comes down to the same people i'd say legacy infrastructure so not everything is a brand new system so it's not always easy to change legacy apps and actually a lot of the apps that you're trying to deliver change on depending on what it is is in the process of being retired so you've got the tactical versus strategic element of it and trying to manage but all of that And then I'd say a lot of it for us, and Steve knows I've been pestering him on something that we're working on for U.S. Treasuries, but it's the complexity around interpreting regulations and change regulations. on mandatory deliverable. So using US Treasuries as an example, the rules are super complex and ever evolving. So being able to lock that down so that you can then lock in the transformation that you need to deliver against that, it can be challenging. Certainly again, T1 for Europe, we've not had the results out yet of what is going to be mandated going forward. So we're trying to lock in a budget for 2026, which has to be done by a certain time at Citigroup, which isn't going to align with when they post the recommendation. So we're almost having to guess what that might be in terms of, you know, setting what the budget needs to be.
Neha Singh: Yeah, and it's, Jimmy, I'm not sure if I answered the question. There was a lot there. Yeah, and it sort of lays out that you start out with your transformation goals, and then you have these very practical obstacles that you have to work through. And I love your approach of first principles, right? This is really what we are trying to solve and being very focused on that, right? Versus there's a whole lot of alleyways you could go down on this topic, which is what makes it so complex. So appreciate that. Yeah. And I see one other question. I wonder if you have some quick thoughts on this one, Steve. So how do you see large and small firms handling these changes, presumably transformation, with larger firms more able to leverage it? So any thoughts there, Steve?
Steve Byron: Yeah, it's a great question, I think. it kind of gets back to just making sure that you're not going to be able to transform everything. So it's being very clear on what those priorities are and what's going to be the most impactful for your business and really kind of honing in on those priorities. I think that's where there is the... Where firms engage third parties to provide part of their services, there is the option of actually having them bear the brunt of the transformation for you there. But I certainly think just being very clear in that. what your priorities are from a business perspective, being aligned across operations and technology from a leadership perspective in terms of shared priorities and shared goals is important so that the whole organization is kind of working on the same priorities simultaneously, I think is where you get the best outcomes. But I think I don't necessarily see that as being a small or large firm challenge. I think it's probably the same in both of those organizations.
Neha Singh: Yeah. And it's sort of all of you are singing from the same song sheet. That is absolutely the critical first step from a transformation point of view. Thank you, Steve. Well, that is all we have time for today. Please note, if we didn't get to your question, we will follow up with you after the webinar. I want to thank Steve, Mike, Jamie, Colin for sharing their valuable perspectives. It was a fascinating discussion. Thank you. And thank you to our audience for joining us today. I hope you found it insightful and helpful as you think about your own transformation efforts. You will receive an email with a link to today's webinar recording and our new 2025 report shortly. You can also scan the QR code you see right now on the screen to get the report. And we also have additional content available for you if you click on the links under resources on your screen. And we'd also appreciate it if you could complete the feedback survey that will appear at the end of this webinar. Thank you again for joining us and have a great day.
Colin Parry: Thank you.
