A panel of experts has concurred that collaboration is crucial for the securities services industry currently faced with mounting challenges and the mammoth task of upgrading legacy systems.
Speaking at Global Custodian’s Collaborate to Innovate event in London, senior figures highlighted that collaboration is especially important when it comes to embracing and implementing the latest financial technologies.
“When you look at the technology underpinning our environment, it is 30 years old,” said Rob Scott, head of market services at Commerzbank.
“The industry is very challenged as volume is static and costs of regulation and technology are rising. Under the theme of collaboration, there is more focus on firms leveraging each others strengths to neutralise the costs, particularly the unknown costs.”
The panel recognised the need to partner with companies to develop new technologies, leaning on the experience and knowledge of some of the emerging start-ups in the FinTech sector.
“Companies that successfully work with FinTechs are able to learn each others trends and this will help them reach new ideas and talents,” said Simon Streule, managing director for strategy and business support at SIX.
“FinTechs helps companies understand business models of the future. There’s a long way to go and the ideas seen are not yet tangible, but most areas can be reachable in time.”
Scott added that working with these FinTech firms was more likely to see successful industry collaboration as he described bank-driven initiatives as often being a “lot of talk” “hot air.”
“If I look back over 15-20 years I can think of many areas of collaboration in the post-trade space and for the most part they’ve all failed as they are bank driven,” he said.
“Look the at R3 initiatives, there is 60-70 banks collaborating so far but I haven’t found two banks can collaborate let alone 60 or 70.”
Keith Tippell, head of securities and FX markets at SWIFT feels that the firms that can successfully collaborate are those that take a specific emphasis on customer needs.
“People are taking a more long-term view which may impact short-term return,” he said.
Where once competitors would solely see each other as rivals, bigger issues and threats in the industry have prevailed and the time has come to work together to strengthen the future of the securities services industry.
Rising costs, regulations and technology advances are forcing securities services firms to take a less proprietary view when building out their businesses and processes.
Recent examples have seen SIX teaming up with Clearstream, DTCC and Euroclear partnering on collateral, and custodians joining various blockchain initiatives together, such as R3.