Broadridge Study: Firms Boost AI While Tackling Data Issues
Financial institutions are significantly ramping up their investments in artificial intelligence and digital assets, even as they navigate persistent challenges with data quality and legacy systems, according to Broadridge Financial Solutions' fifth annual Digital Transformation & Next-Gen Technology Study.
Investment Trends and Challenges
The research, which surveyed over 500 technology and operations leaders across wealth management, capital markets, and asset management firms globally, reveals that 80% of firms are making moderate-to-large investments in AI this year. Additionally, 72% of organisations are specifically investing in generative AI, up substantially from 40% in 2024.
The study also shows 71% of institutions are making major investments in blockchain and distributed ledger technologies, compared to 59% last year, whilst 64% of firms are substantially investing in cryptocurrency initiatives, increasing from 51% in 2024.
These investments come at a critical time, as new AI models drive market volatility and Bitcoin ETFs generate billions in daily trading volume.
Despite the enthusiasm for emerging technologies, financial institutions continue to struggle with fundamental data issues.
While 58% of executives recognise that a clear data strategy leads to maximum returns on technology investments, 40% acknowledge ongoing data quality problems within their organisations.
The pace of technological transformation remains a concern for many decision-makers, as 41% feel their technology strategy isn't advancing quickly enough. Furthermore, 46% believe legacy technology is undermining their operational resilience.
Data Strategy and Future Directions
"As financial services firms modernise their operations and move away from legacy systems, many are realising that the right data management strategy has the power to break down silos and achieve the level of data quality needed to realise the potential of AI and sustain prolonged digital transformation within their organisations," says Chris Perry, President of Broadridge.
Data harmonisationābringing together information from disparate sources into a cohesive structureāhas become a strategic priority.
The study reveals that 58% of executives identify it as the ideal driver for maximising return on investment, whilst 60% express confidence that their data quality will not create transformation challenges.
The study reveals specific expectations around generative AI adoption, with 68% of respondents believing GenAI will primarily impact employee productivity.
Approximately 35% expect to start seeing returns on investment within just six months. Nearly half (47%) of executives believe distributed ledger technology is creating new opportunities in capital markets, though 73% anticipate greater regulation and governance for digital assets in the near future.
Technology Infrastructure and Budgets
Cloud platforms continue to serve as the backbone for financial services transformation. The research indicates that 86% of firms are integrating cloud into their processes, with 84% making moderate-to-large cloud investments this year.
When asked which technology has the greatest impact on their business, 31% of executives selected cloud platforms and applications, whilst 27% plan to increase their investment in cloud technology over the next two years.
Financial institutions are responding to these challenges by increasing technology innovation budgets. Firms expect to allocate 29% of their total IT spend to technology innovation over the next two years, a 7% increase from the previous year's research.
The shift toward integrated solutions rather than piecemeal approaches is becoming more pronounced across the industry.
"It's really all about straight-through processes and the ability to see consistent data across all products and workflows," explains Jason Birmingham, Broadridge Global Head of Engineering.
"Firms that are still trying to drive transformation by bolting on point solutions are quickly starting to realise that there is a limit to how much they can accomplish before they address the fundamental flaws in their platforms."
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