Tom Carey ( Broadridge President of Global Technology and Operations (GTO) )
Germán Soto Sanchez ( Broadridge Senior Vice President of Corporate Strategy )
(1) Broadridge is celebrating 25 years in Japan. How has your business evolved over the past 25 years and what unique value does Broadridge provide to clients in Japan?
(Tom Carey) We are delighted to be celebrating 25 years, it’s fantastic and we look forward to the next 25 plus years. When we started in 1998 with our first client in Japan we had a vision that we should be able to service all the world’s major markets. At Broadridge, we think about how to be a global company serving global markets, but key to that focus is how to be an excellent service provider on the local market level. We recognized the importance of the Japanese market and the big opportunity here, so we've been very deliberately growing our presence, our clients, our technology, and our solutions. We are proud to now service over 30 firms within Japan and growing. We launched a joint venture with the TSE, and now have a significant presence there, too. We've been very pleased with the progress and how we've been able to help clients in this market.
One of the key things that we have emphasized in Japan is the importance of building relationships, both with our clients and staff. We've just come back from a client meeting where it was very clear that they appreciate our dedication, focus, and time. One of the unique things we bring to clients is that we’ve built our solutions to be advanced and market compliant and we can deliver innovation and new ideas into this market. We offer our clients in the Japanese market a very strong value proposition both domestically and overseas.
(2) In 2004, Broadridge launched ICJ, a joint venture with the Tokyo Stock Exchange. How does ICJ contribute to better corporate governance in Japan, and what is your strategy for growth going forward?
We provide three services with this. Our core service, which is our electronic voting platform, our virtual shareholder meeting platform, and data services towards growth in the future.
We are expanding our client base by investing in the platform as there are another 2000 TSE-listed companies not yet on the platform. We are also exploring other areas of opportunity including data services, expanding virtual shareholder meetings, and areas like ESG. It's a two-pronged approach to grow the business.
We think overall it's been very much a success. It has contributed to the competitiveness of Japanese capital markets by enabling better governance that investors are a part of, and engaging more with listed companies. And that's what we want. Part of our mission as Broadridge is enabling better financial lives, which includes enabling investors to engage with the companies they're investing in. That's one of the critical aspects of the joint venture.
(3) Capital markets are a key focus area for Broadridge in Japan. What challenges are your clients facing in capital markets and how are you helping them overcome those challenges?
(Tom Carey) Capital markets is a complex business, but it’s the business where our clients all want to grow. Yet there are lots of pressures there as well. In the regulatory environment there are constantly new regulations and new rules to comply with. There is also adoption of new market standards. This market has always been a market where you could not fail to settle. But other markets are different, and are globalizing towards much faster settlement. So from T+2 in the U.S.to T+1, and in the European markets CSDR (Central Securities Depositories Regulation) is a new regulation to comply with. Even local firms who want to transact overseas are pressured in that regard. There's also a push towards digital and how firms can more easily digitize what they're doing. German already talked about the ICJ side of things in terms of digitization.
In the current macroeconomic environment there is cost pressure too. So there's always an underlying question of “how do I grow, but how can I be compliant, and also keep current with technology?” The last three months have been dominated by conversations about AI, so how do firms think about how to embed AI and new techniques into their technology and services to empower their clients?
Our advantage is that we can bring those ideas to the table and help clients be successful and grow. We create services, clients trust us, and when new requirements come out or new technology emerges, we will be first to market, protecting our clients in that respect as well.
(4) Broadridge has a long history of innovation. What are examples of innovative solutions you have launched recently that are in market at scale?
【Germán Soto Sanchez) Innovation is something that we've been very focused on because companies that focus on and drive innovation have been shown to outperform. So it's critical to innovate if you want to be a leader. Our approach to innovation is threefold: we experiment, partner with companies that have like-minded interests, and engage with the ecosystem and regulators.
I'll give you some examples. Our Distributed Ledger Repo (DLR) solution leverages distributed ledger technology. We launched the platform in 2021, and it allows repo market participants to agree to trade, to track, and to settle repurchase transactions. This is important because the repo market is about $10 trillion per day. It's a vital part of the financial services ecosystem, with large cap market firms and investors leveraging the repo market to fund their trading activity. Historically, it's been a very manual process, which has led to failures. And so, through the use of distributed ledger technology and smart contracts, we've been able to streamline that process and make it much more efficient at scale. We're up to around $70 billion of trades per day, it is growing dramatically, and there are a number of opportunities to continue to expand this use case and solution. Another example is digitization. In the communication side of our business, a solution called Wealth InFocus, holistically reimagines the communication aspect of information that investors receive. Typically, you will receive an email or fax, which is very static. But Wealth InFocus, is very rich and we've seen that customers want interactive communications rather than a traditional ’account holding statement. They want something that’s dynamic, interactive, engaging, and full of useful data. And that's what Wealth InFocus does: it incorporates those elements to reimagine what a statement should look like versus a traditional static statement. So that's another example of innovation that has been very well received. The final example is innovation. We use innovation to create new businesses, but we also use innovation to make what we do more efficient. In terms of the traditional proxy process, people fill out their proxy cards, but interpreting the information written has been a very manual process. So we've used AI to automate the data extraction process from those cards. Tom highlighted AI and we're looking at a number of use cases to see what we can do it there. We continue constantly to innovate across the firm.
(5) What key trends do you see in asset management in Asia and particularly in Japan, and how is Broadridge enabling growth of the industry?
(Tom Carey) We have been servicing the asset management industry for over 15 years now. We have a comprehensive set of solutions in the market and see a strong connection between what we offer on the buy side and what we offer to the sell side. There is a very strong connectivity to what we do. We've been enabling asset management and hedge funds to come to market to quickly launch new funds or new opportunities and to develop opportunities in the local market or globally. In this market in particular, we are very keen to service both buy side and sell side clients and enable them to have better connectivity and more seamless actions. As Germán says, some of the techniques we're now developing can give clients better insight into what we do, how they can operate, how they can find new client opportunities and how they can use that data. That's a key push for us in these markets.
(6) Broadridge’s stated purpose is to enable better financial lives. How is Broadridge achieving that purpose?
(Germán Soto Sanchez) We are a behind-the-scenes player, by which I mean that our customers are institutions, not individuals, but the role we play in terms of enabling better financial lives is to provide critical infrastructure. This infrastructure empowers governance, communications, and investing on a global level.
Our customers include banks, broker dealers, wealth managers, asset managers, and public companies, and our infrastructure serves as a global communications hub that connects thousands of public companies and mutual funds to tens of millions of individual and institutional investors around the world. That's a very powerful network, all connected through Broadridge. We process about 7 billion communications per year and have facilitated thousands of virtual shareholder meetings both in Japan and globally. We facilitate the communications behind better governance, which facilitates our financial lives and the investment process for shareholders.
On the Global Technology and Operation business, we provide critical infrastructure that powers about $9 trillion of fixed income and equity trades per day. We also provide critical infrastructure for wealth managers, and infrastructure and services for asset managers as well.
We are a vital piece of the financial ecosystem on a global basis. We have 15,000 associates worldwide who are focused on making sure that we continue to drive value for our customers.
(7) Do you have a message to Japanese financial institutions and investors?
(Tom Carey) We are very proud of being here for 25 years. But that is just the beginning and we look forward to the next 25 years. I have said that the new graduates who join Broadridge this year will be our future. And I would like our clients and our prospects to know that our staff are dedicated to servicing them well. I've spent the last week here with clients and our staff, and our staff are so proud to offer our services, but also have a desire to continually improve and to bring new technologies and techniques into this market, to provide insights and better ways of doing work, to help our clients improve their revenues and outlook, and to help investors too. We are totally dedicated to this market and we see a very bright future for ourselves, and for how we service our clients. We look forward to continuing our journey with the TSE, with our joint venture, to being able to offer our services to all the corporations in Japan, to give them the most efficient service we can, and to welcoming new clients.
(Germán Soto Sanchez) We are extremely committed to the Japanese market. We believe the Japanese market is the cornerstone of our Asia strategy at Broadridge. We also believe that there are a number of areas where we can provide additional value to companies and institutions in Japan. As we think about the future, we are thinking about developing capabilities in areas such as ESG, which we are investing in. Not just traditional ESG data, but ESG services, consulting services, metrics, etc. We think these will be very valuable. We are also extremely strong on data analytics and that's also something that we want to bring into the market. We believe we have access to data that will drive significant value for our customers. What I want to highlight is that we are thinking proactively about the future and what additional solutions we have that we can bring to this market.
