The Advisory Career

A New Age Of Mutualization

How financial firms are leveraging data-driven, flexible architecture to innovate and optimize operations

A new study from Broadridge Financail Solutions, authored by its chief transformation executive Mike Tae, highlights the benefits of this new model for Fintech service delivery in the context of a post-pandemic world. Access the report here.

NEW YORK, May 11, 2021 /PRNewswire/ — As the financial services industry confronts the new realities of a post-pandemic era, many firms are beginning to shift toward mutualization models for their technology and operations, according to a new whitepaper released today by global Fintech leader Broadridge Financial Solutions, Inc. (NYSE:BR). Mutualization is a model where participants more quickly gain access to new technologies, scalability, and resiliency while saving time, money, and risk; by sharing in the benefits of an industry solution provided by a reliable, trusted, and independent third party.

The latest industry whitepaper from Broadridge highlights the benefits of this new model for Fintech service delivery in the context of a post-pandemic world. As more financial services organizations digitize their operations and contend with rising cost pressures, mutualization enables Fintech firms to improve efficiency, accelerate time-to-market and reduce transformation risk – all while freeing up management attention and other critical resources that can be devoted to other core needs.

“Implementation of a mutualized model allows firms to increase operational productivity, resiliency and efficiency that are the hallmarks of a modern, modular approach to service delivery,” said Michael Tae, Chief Transformation Officer at Broadridge. “We developed this report after many conversations with clients who shared their interest in mutualization but felt uncertain about where to begin updating their technology functions. This whitepaper serves as both a useful guide to those interested in expansion and an informational tool to firms that are just beginning their technology journey.”

The new whitepaper serves as a roadmap for financial services firms hoping to establish a mutualized service delivery model.

Highlights from the paper include:

  • The four forces driving mutualization: margin and cost pressures, regulatory change, digitization and infrastructure shocks
  • The long-term benefits of mutualization: cost savings, regulatory compliance, operational productivity, and resiliency and innovation at scale
  • The elements needed to establish a new model of mutualized service delivery
  • The key questions every financial services executive should ask as they embark on the path towards mutualized service delivery

Excerpts from Modernizing Through Mutualization: A New Model for Fintech Service Delivery in a Post-Pandemic World

Margin & Cost Pressures

Ever since the global financial crisis erupted over a dozen years ago, financial services firms have faced pressures on return on-equity, which have continued to intensify due to a few industry-wide trends. Some have impacted revenue. The shift from active to passive investing and the proliferation of no commission trading, for example, has squeezed once-lucrative asset management and broker-dealer fees. Others have affected the bottom line. Additional pressures due to heightened regulation have led financial services firms to invest heavily in strengthening their regulatory and compliance infrastructure. The advent of newer fintech competitors has only intensified the need to review existing economic models.

Taken together, all of these pressures have forced financial services firms to rein in operating costs. For instance, between 2014 and 2020, banks have eliminated about a half-million jobs globally, mostly in the front-office. As banks have exhausted many cost-reduction opportunities, the search for continued savings throughout the organization has continued.

Regulatory Change

Implementation of a mutualized model allows firms to increase operational productivity, resiliency and efficiency that are the hallmarks of a modern, modular approach to service delivery...

The financial crisis spawned a raft of new banking regulations in its immediate aftermath, and financial services firms have been forced to grapple with an onslaught of new ones in recent years. One noteworthy trend is global regulators’ focus on driving investor engagement and transparency by taking advantage of advances in technology. Examples of recent regulation include SEC Rule 30e-3 in the US and the Shareholder Rights Directive II in the EU. Additionally, growing concern around areas of data and privacy are fueling further regulatory pressure. To deliver on new regulatory requirements, many financial services firms are undergoing or will need to undergo a radical transformation of
their legacy infrastructure.

Simply keeping up with the ever-evolving rules continues to be a mammoth undertaking. The associated compliance costs have skyrocketed as well. In fact, a report from Rice University found that compliance costs for Dodd-Frank regulation alone cost U.S. banks $50 billion a year. Generally, firms tend to develop in-house solutions to meet regulatory deadlines in the near term. But over the longer-term, they undertake a more strategic
approach to strengthen compliance.


Two distinct trends are driving greater digitization. First, are evolving customer expectations where they expect interactions with their financial services firm will be as easy as making a purchase on Amazon, taking a Peloton fitness class, or streaming Netflix content. Initially, several fintechs broke through by delivering an improved, gamified user interface and sleek new apps – in other words, a superior digital experience that traditional financial services firms could not match. Today, however, many established players are quickly catching up as they evolve to meet these heightened customer demands. And even more sophisticated innovations – especially those powered by artificial intelligence and blockchain technologies – are gaining traction every day.

Second, many financial services firms have embarked on comprehensive digital transformation plans in recent years as they seek to transition from historically manual, back-, middle and front-office functions to more modern, digital processes. This trend has only accelerated amid the pandemic-era requirements of remote work, where financial firms scrambled to find digital alternatives to once-routine, paper-based tasks – from opening accounts to signing documents.

Access the full report here.




About Broadridge
Broadridge Financial Solutions (NYSE: BR), a global Fintech leader with over $4.5 billion in revenues, provides the critical infrastructure that powers investing, corporate governance, and communications to enable better financial lives. We deliver technology-driven solutions to banks, broker-dealers, asset and wealth managers and public companies. Broadridge’s infrastructure serves as a global communications hub enabling corporate governance by linking thousands of public companies and mutual funds to tens of millions of individual and institutional investors around the world. In addition, Broadridge’s technology and operations platforms underpin the daily trading of on average more than U.S. $10 trillion of equities, fixed income and other securities globally. A certified Great Place to Work®, Broadridge is a part of the S&P 500® Index, employing over 12,000 associates in 17 countries. For more information about us and what we can do for you, please visit