The global financial services industry is characterized by increasingly complex and integrated infrastructures and products, new and changing business models and rapid technological and regulatory changes. Our clients’ needs and demands for our products and services evolve with these changes. Our future success will depend, in part, on our ability to respond to our clients’ demands for new services, capabilities and technologies on a timely and cost-effective basis. We also need to adapt to technological advancements such as AI, machine learning, quantum computing, digital and distributed ledger and cloud computing and keep pace with changing regulatory standards to address our clients’ increasingly sophisticated requirements. Transitioning to these new technologies may require close coordination with our clients, be disruptive to our resources and the services we provide and may increase our reliance on third-party service providers such as our cloud services provider.
In addition, we run the risk of disintermediation due to emerging technologies, fintech start-ups and new market entrants. If we fail to adapt or keep pace with new technologies in a timely manner, it could harm our ability to compete, decrease the value of our products and services to our clients, and harm our business and impact our future growth. The emergence of tokenized securities in which ownership of financial instruments is recorded and transferred on distributed ledger or blockchain-based platforms rather than through traditional intermediary infrastructure presents the risk of disintermediation to our clients or certain of our businesses. If tokenized securities achieve broad market adoption, demand for traditional securities processing, investor communications, proxy distribution, and transfer agency services and related technologies of the type we provide could be altered, reduced or eliminated. We may need to make significant investments to adapt our products and services to a tokenized securities environment, and there can be no assurance that we will be able to do so successfully or in a timely manner or on a competitive basis. This could adversely affect our business, results of operations, or financial condition.