Industry panel stresses collaboration to overcome cyber and tech barriers

Key industry themes and trends were under the microscope at the annual TSSAG conference in London.  

By Chris Lemmon

The Securities Services Advisory Group (TSSAG) convened in London at the back end of last year, tackling some of the key themes facing the asset servicing world today.  

The first panel discussion shone a spotlight on the challenging demands of cybersecurity for institutions – and the need for both investment and cooperation across the industry.  

One panellist described the fallout from a recent phishing attack involving multiple top-tier banks that resulted in substantial financial loss for numerous parties. The speaker highlighted the arduous nature of the recovery process, with participants often reluctant to communicate openly about the suspicious transaction – pointing to a lack of cooperation between banks and regulators.   

The narrative underscored a broader theme across the market: while the industry aspires to operate collaboratively, vested interests often hinder effective communication and resolution. 

As the discussion evolved, the focus shifted to emerging technologies and their potential impact on financial services. The introduction of digital identity systems, particularly within the EU, is poised to revolutionise Know Your Customer (KYC) and Anti-Money Laundering (AML) processes. The conversation also touches on the decentralisation of financial services through blockchain technology, which could redefine how institutions manage accounts and transactions. 

“Recovering stolen assets on a public blockchain is much easier; they know exactly where the stolen assets sit and in what address,” said one panellist.  

As the development of new technology picks up pace each year, panellists agreed that while the integration of AI and blockchain within the securities services space will improve efficiency, providers must be conscious of new vulnerabilities that could be introduced.  

The reliance on single vendors, for instance, poses geopolitical risks, said one expert, especially in a world where political tensions can disrupt operations. As a result, there needs to be an industry-wide proactive approach to risk management – based on a foundation of collaboration and adaptability in the face of emerging threats. 

Tokenisation – what’s the latest? 

The next panel discussed how tokenisation could serve to reshape the securities services landscape – making it more resilient and secure, while making investment products more accessible to a broader audience of investors.  

The panel highlighted the UK’s pioneering efforts in the tokenisation space, spearheaded by the Investment Association (IA) in collaboration with the Treasury’s Tech Working Group. The IA’s initial report served as a blueprint for understanding how UK funds could be tokenised, proposing a model that utilised private permissioned chains and off-chain settlements to enhance efficiency. 

As the conversation progressed, the panellists acknowledged the varying degrees of engagement among IA’s 250 members regarding tokenisation. One-third were actively implementing these changes, another third were observing, and the remaining members had yet to prioritise this shift. This disparity underscored the need for collaboration among industry stakeholders to foster a unified approach to digital assets. 

The discussion also touched on the democratisation of investment opportunities, with the potential for tokenisation to lower barriers for retail investors. As the industry evolves, there is a growing recognition that the mutual fund model, which has remained largely unchanged for a century, may no longer be fit for purpose.  

The panel advocated for a reimagining of investment products to meet the needs of a new generation of investors who expect seamless digital experiences akin to those offered by tech-driven platforms. 

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