By Steve Johnson, Chief of Staff at Proxymity
The financial markets are becoming more democratised than ever. The rise in the number of retail investors accessing trading platforms and the ‘great wealth transfer’ trickling down to Gen Z are but two examples of a transformation in the accessibility of financial markets to new demographics. However, new audiences require new forms of communication and financial inclusivity. The importance of inclusive financial systems and effective corporate governance, especially in the digital era, are pivotal for fostering equitable economic growth. This is where technology can step in to play a key role in ensuring the transparency and transformation of financial communications.
Opportunities for enhancing financial inclusion in the UK
To improve financial inclusion in the UK, we must emphasise the potential of modernised systems over maintaining less efficient procedures. This encompasses everything from manual proxy voting to in-person AGMs, all of which not only consume significant time, costs, and human resources but also present challenges to information accessibility and shareholder participation.
Fortunately, new solutions are entering the market that can help UK organisations enhance their existing systems while addressing the complexities of the current financial system and encouraging good corporate governance.
With the UK missing out on the top 10 countries in the 2023 Global Financial Inclusion Index, and over 28% of people feeling ‘locked out’ of the UK’s financial services market last year, up 20% from the inaugural survey in 2022 – it is clear that there is room for improvement to align with leading markets, such as Singapore, Sweden, and The Netherlands, which were in the top three of the 2023 Global Financial Inclusion Index.
This is where Proxymity can help.
Proxymity’s role in transforming corporate governance
Proxymity is a centralised digital communications platform that connects issuers, intermediaries, and investors worldwide in real-time. This is possible through Proxymity’s intuitive platform, which encompasses a range of products. These products include Vote Connect Total for proxy voting and Shareholder Disclosure for regulatory compliance, among others. Each of these products is designed to bring unprecedented transparency, efficiency, and accuracy to traditional financial processes.
Consider proxy voting. It plays a pivotal role in fostering inclusive financial systems, enabling remote shareholders to participate in company decisions. However, the existing system in prominent markets such as the UK and the US relies heavily on manual processes, exposing itself to a range of potential issues – from mis-delivery of voting ballots to errors in the tabulation of shareholder votes.
In this context, Proxymity’s platform aims to improve current proxy voting practices by allowing shareholders to engage directly in the voting process by making it digital and ensuring meeting announcements are transmitted as a ‘golden source’. It mitigates the potential for error or biases, fostering sound corporate governance and enhancing shareholder value.
In an age where shareholder activism holds increasing importance in corporate governance, Proxymity’s streamlined platform assures shareholders that their votes will be accurately counted, ensuring their influence in corporate decision-making. This promotes greater engagement between shareholders and companies, building trust between all parties.
However, making sure that shareholders’ voices are heard is not enough. To cultivate a connected and engaged company-shareholder environment, companies need to guarantee their messages and reports effectively reach shareholders, particularly retail investors.
The information gap is one of the biggest challenges companies face with their retail stakeholder engagement, with retail investors’ votes only representing 28% of their total shares, compared to 92% for institutional investors. Proxymity’s platform enables companies to monitor voting in real-time, identifying trends, such as retail versus institutional stakeholder engagement, to address and target management-friendly shareholders with tailored communication.
Proxymity’s platform also offers the scalability and expertise to achieve shareholder disclosure compliance goals, removing the operational and technological costs and poor turnaround times typically associated with compliant disclosure processing. The platform is SOC2-certified, meeting the highest standards for data security protection and data transmission between multiple parties.
Looking at the future of financial systems and corporate governance, it’s clear that innovation and technology play a pivotal role in its progress. The UK’s financial sector, while striving to align with global leaders in terms of financial inclusion, faces ongoing challenges. Nevertheless, there are emerging solutions, including Proxymity, which bolster existing solutions to provide transparent communication between companies and shareholders, and which will become ever more necessary throughout 2024.
