Janet Du Chenne reports from the Network Forum on five key themes that will drive change in securities services
On one panel, custodians discussed the next radical change that will help secure growth in the custody business. Deutsche Bank’s Graham Ray expressed that the industry needs to get better at articulating the value add it provides to get back to profitability. To highlight this point, he explained how Deutsche Bank decomponentised its custody offering after assessing the drivers of change in post-trade and the value added services that clients increasingly require following those changes. He also emphasised the need to leverage data to better understand how people and technology come together to focus on the process, as well as the platforms, to be able to demonstrate the full value of those new custody models. “This transparency should help us secure future growth with our clients,” said Ray.
The forum also reflected on the standardisation and harmonisation of EU market infrastructures and financial institutions that have set the recent priorities on investment in the industry. These include infrastructure initiatives such as TARGET2-Securities (T2S), providing markets with a harmonised European securities settlement engine; and the Central Securities Depository Regulation (CSDR), creating uniform standards for CSDs and implementing T+2 settlement in European markets. These initiatives were carried out under a far-reaching goal designed to further align standards and processes across EU member states.
Collaboration among industry players was a key topic at the forum, with discussion focussing on how this has already yielded collateral and liquidity benefits. Client user cases demonstrated how they have used the harmonisation and standardisation achieved in Europe thus far to revise their business models and outsource asset servicing and settlement to third party providers within new partnership account models.
Further momentum is now required in order to overcome the wider challenges that are present and future challenges that the industry will face. This means bringing people together across organisations front to back, leveraging technology with an openness to collaborate to deliver new partnership services to current and future industry players.
This momentum relies on collaboration between custodians, infrastructure partners and Fintechs to review the end to end processes in the custody chain and find optimum ways to continue to deliver new products and services, and ultimately, value to clients, said Ray.
Digital and data
Digital change means empowering the client with new technologies and data is at the heart of that evolution. Given the amount of data they hold, securities service providers are strongly positioned to create transparency to ensure compliance with regulations and provide further services that add value and insight to the client. Transparent data and digital technologies can enable providers to focus on the process as well as the platforms, to collectively reduce costs and add value and price accordingly.
Empowering the client
At the end of the day, after the Network Forum concluded, the key longer term question that remains and that each participant should ask themselves is this: what is my institution’s role in collectively moving the industry forward and how should I adjust processes and culture to achieve a digital future that ensures our clients remain at the heart of the services we provide?
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