The Five-Year Outlookfor Sell-side Banking

September 2016

Based on research by FIS and Lantern Insights

THE NEWMIDDLE OFFICE

REGULATION AND THE MIDDLE OFFICE

DATA PRIVACY IS THE BIGGEST WORRY FOR THE MIDDLE OFFICE

All data is sourced from July 2016 survey of 173 middle-office executives by FIS and Lantern Insights

Which area of regulation concerns you the most?

34%

14%13% 13%

9% 9%6% 2%

THE MIDDLE OFFICE IS ALSO WORRIED ABOUT THE OVERALL IMPACT OF REGULATION

83%

17%

Do you expect regulation to significantly change your revenue model?

76%

24%

Do you expect increased regulation to severely impact your businessin the next 24 months?

YES

NO

YES

NO

HOW WILL REGULATION IMPACT BANKS’ REVENUE MODEL?

21%

25%

54%INCREASED

COMPLIANCE COSTS

REDUCED COMMISSIONS

NEW REVENUE MODELS

WHAT DOES THE FUTURE HOLD?

MOST IMPORTANT FUTURE TRENDS FOR THE MIDDLE OFFICE

Cybersecurity

Fintech start-ups

Automation

Mobile services

Blockchain

Outsourcing

Regulatory compliance

Execution algorithms

Multi-asset technology

49%

42%

37%

32%

29%

29%

29%

24%

19%

33%

31%

37%

48%

26%

31%

26%

24%

34%

18%

27%

26%

19%

45%

41%

44%

53%

48%

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

BUDGET PRIORITIES REFLECT THE CHANGING TRENDS

Middle Office (n=173)

Only 12 percent say regulatory compliance will get the biggest increase in investment by 2020.

Market expansion Customer experience Disruptive technologies or companies

Talent management Regulatory compliance

34%

20% 20%

14%12%

THE ROLE OF TECHNOLOGY

IS YOUR BANK BECOMING A TECHNOLOGY DRIVEN BUSINESS?

SAY YES88%

TECHNOLOGY PLAYS A ROLE, BUTSKILLS ARE THE BIGGEST OBSTACLE

IF YES IF NO

We have an ongoing technology training program

We have staff with the latest skills

We have the latest technology

21%

26%

53%

Other

Budget constraints

Legacy technology

Skills shortage

10%

20%

25%

45%

We have an ongoing technology

training program

We have staff with the latest skills

We have the latest technology

WHAT’S NEXT FOR THE MIDDLE OFFICE?

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 worried about new competitors

I'm expecting to change roles more often

I'm automating repetitive tasks

I'm starting to use new sources of data

I'm learning how to use new technology

1%

9%

14%

17%

27%

29%

39%

42%

53%

Middle Office (n=173)

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

But by 2020, I’m likely to invest in market expansion or disruptive technologies or companies – not regulation.

Regulation will have a significant impact on my

revenue model.

I’m especially concerned about data privacy.

My role is changing too as I learn new skills, use new

sources of data and automate repetitive tasks.

HOWIS YOUR EXPERIENCE

OF THE MIDDLE OFFICE CHANGING?