INNOVATING THE FRONT OFFICEThe Five-year Outlook for Sell-side Banking

September 2016

Based on research byFIS and Lantern Insights

TODAY

REGULATION REMAINS A KEY CONCERN

80%

20%

YES

NO

All data is sourced from July 2016 survey of 70 front-office executives by FIS and Lantern Insights

An overwhelming number of respondents believe increased regulation will severely impact their business in the next 24 months

WILL REGULATION CHANGE THE FRONT OFFICE’S REVENUE MODEL?

SAY

YES

81%46%

32%

22%

HOW?

INCREASED COMPLIANCE COSTS

REDUCED COMMISSIONS

NEW REVENUE MODELS

THERE ARE WORRIES ACROSS THE BOARDWhich area of regulation concerns you the most?

Data privacy Trade trans-

parency

Solvency and liquidity

Tax Capital re-quirements

Reporting Differences b/w domestic & global rules

Other

19% 19%17%

13%11% 11%

7%

3%

BUT…REGULATION WON’T

ALWAYS BE TOP OF MIND

THE FIVE-YEAR OUTLOOK

WHAT WILL SUPPLANT REGULATION?

Fintech start-ups (n=16)*

Automation (n=25)*

Outsourcing (n=31)

Cybersecurity (n=37)

Execution algorithms (n=25)*

Mobile services (n=32)

Regulatory compliance (n=11)*

Multi-asset technology (n=25)*

Blockchain (n=8)*

50%

48%

32%

32%

32%

31%

27%

24%

13%

13%

36%

48%

46%

20%

28%

18%

24%

63%

38%

16%

19%

22%

48%

41%

55%

52%

25%

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

1st Most Important 2nd Most Important 3rd Most Important

THE FRONT OFFICE IS ALSO FOCUSED ON GROWTH

33%

24%

19%

13%

10%

Market expansion will get the biggest increase in investment by 2020

MARKET EXPANSION

CUSTOMER EXPERIENCE

DISRUPTIVE TECHNOLOGIESFOR COMPANIES

REGULATORY COMPLIANCE

TALENT MANAGEMENT

THE TECHNOLOGY-DRIVEN BUSINESS

ARE BANKS BECOMING TECHNOLOGY-DRIVEN BUSINESSES?

SAY YES91%

WHY OR WHY NOT?Skills and technology make the difference – not training or budget

IF YES IF NO

*Low Base: > 30

We have an ongoing technology training program

We have staff with the latest skills

We have the latest technology

9%

44%

47%

Legacy tech-nology

Skills shortage

17%

83%

We have an ongoing

technology training program

We have staff with the latest skills

We have the latest technology

Legacy technology

Skills shortage

THE PERSONAL IMPACTHow is technology changing your plans for the next 5 years within your business?

None of the above

I'm expecting to work longer hours

I'm working with new departments or across silos

I'm having to do more myself

I'm automating repetitive tasks

I'm worried about new competitors

I'm expecting to change roles more often

I'm starting to use new sources of data

I'm learning how to use new technology

3%

4%

6%

21%

26%

29%

31%

31%

33%

WHAT DOES THIS MEAN FOR YOU?

Regulation - especially data privacy and trade

transparency - is still keeping me up at night. And it will

have a significant impact on my revenue model.

Technology will play an important role, whether I’m learning new skills or facing

new competitors.

I will invest in market expansion and the customer

experience to counter the effect of regulation on my bottom line and to be more competitive.

WHAT’S YOUR FIVE-YEAR

OUTLOOK?