INSIDE THEBACK OFFICEThe Five-year Outlook for Sell-side Banking

September 2016

Based on research by FIS and Lantern Insights

WE ASKED BACK-OFFICE EXECUTIVES FROM BANKS AROUND THE WORLD…

WHAT WILL IMPACT YOUR BUSINESS – NOW AND IN THENEXT FIVE YEARS?

THE NEXT TWO YEARS ARE ALL ABOUT REGULATION

All data is sourced from a July 2016 survey of 71 back-office executives by FIS and Lantern Insights

SAY INCREASED REGULATION WILL SEVERELY IMPACTTHEIR BUSINESS IN THE NEXT 24 MONTHS

79%

BELIEVE REGULATION WILL SIGNIFICANTLY CHANGE THEIR REVENUE MODEL

83%

HOW WILL REGULATION IMPACT REVENUE MODELS?

59%

10%

31%

INCREASED COMPLIANCE

COSTS

REDUCED COMMISSIONS

NEW REVENUE MODELS

WHAT ABOUT THE LONGER-TERM?

46%

15%

10%

17%

11%

BY 2020, THE FOCUS WILL BE ON MARKET EXPANSIONWhere will you increase investment the most by 2020?

MARKET EXPANSION

CUSTOMER EXPERIENCE

DISRUPTIVE TECHNOLOGIESFOR COMPANIES

REGULATORY COMPLIANCE

TALENT MANAGEMENT

AUTOMATION AND OUTSOURCING ARE ALSO TOP OF MIND, ALONG WITH CYBERSECURITY

Blockchain (n=9)*

Automation (n=16)*

Outsourcing (n=28)*

Cybersecurity (n=37)

Mobile services (n=39)

Fintech start-ups (n=15)*

Execution algorithms (n=18)*

Regulatory compliance (n=18)*

Multi-asset technology (n=33)

56%

56%

50%

46%

31%

27%

22%

22%

6%

11%

25%

25%

30%

36%

40%

39%

44%

39%

33%

19%

25%

24%

33%

33%

39%

33%

55%

Which of the following trends do you think will be most important to your sell-side business over the next five years?

BANKS ARE ALSO LIKELY TO OUTSOURCE ACROSS THE ENTERPRISEBy 2020, my business is likely to:

Outsource front-office functions

Outsource middle-office functions

Outsource back-office functions

None of them

49%

38%

52%

10%

THERE ARE OPPORTUNITIES

TOO

BIG DATA COULD PROVIDE AN EDGE FOR MULTIPLE FUNCTIONS

32%

20%14%

18%

14%1%

Where will big data deliver the biggest competitive advantage by 2020?

OPTIMIZED CASH AND LIQUIDITY

COST OR OPERATIONAL EFFICIENCIES

CUSTOMER EXPERIENCE

DIVERSIFIED OFFERINGS

NEW MARKETS

OTHER

TECHNOLOGY IS PLAYING AN IMPORTANT ROLE TOO

POST-TRADE PROCESSING

RECONCILIATIONSCORPORATE ACTIONS

30%42% 25%

Which areas will technology have the most impact on within your business over the next two years?

MY BANK IS BECOMING A TECHNOLOGY-DRIVEN BUSINESS

OF BACK-OFFICE EXECUTIVES SAY…93%

WHAT MAKES A TECHNOLOGY-DRIVEN BANK?

WE HAVE STAFF WITHTHE LATEST SKILLS18%

WE HAVE AN ONGOING TECHNOLOGY TRAINING PROGRAM30%

WE HAVE THE LATEST TECHNOLOGY50%

WHAT’S HOLDING BANKS BACK?

BUDGET CONSTRAINTS

20%

LEGACY TECHNOLOGY

40%

SKILLSSHORTAGE

40%

*Low Base: > 30

TECHNOLOGY IS CHANGING MY JOB TOO

NEW TECHNOLOGY, NEW DATA,NEW PROCESSES

None of the above

I'm expecting to work longer hours

I'm having to do more myself

I'm worried about new competitors

I'm working with new departments or across silos

I'm expecting to change roles more often

I'm automating repetitive tasks

I'm starting to use new sources of data

Im learning to use new technology

1%

13%

17%

17%

27%

31%

32%

48%

54%

How is technology changing your plans for the next 5 years within your business?

Back Office (n=71)

IS YOUR FIVE-YEAR

OUTLOOK THE SAME?