Sibos 2020 top takeaway: Securities services firms look to lean on each other to weather COVID crisis 

Our editors summarise the biggest talking points for securities services providers from this year’s Sibos digital event. 

By Joe Parsons and Jonathan Watkins

A digital format for Sibos 2020 meant a thinned schedule this year, leaving fewer securities services dedicated panel sessions, but there were still plenty of takeaways for the custody community.  

Despite the lack of an aircraft hangar-sized exhibition hall, artisan corporate coffee and evening gathering, it’s fair to say SWIFT certainly did the best they could in terms of replicating the flagship global conference of the banking world. 

The event was largely focused on three themes: digital transformation, sustainability and banking for humanity, and technology innovation, while undoubtedly one component which bettered its traditional setup was the inclusion of more high-profile speakers from the banking community. In fact, the CEOs from the largest four custodians – BNY Mellon, JP Morgan, State Street and Citi – all featured.  

The recurring message throughout the conference was the increased digitalisation of securities services since the onset of the global pandemic, both from a client experience and product perspective. “Our plans that would have taken two years occurred within two months,” was a quote heard throughout numerous panels. 

The View From The Top session with BNY Mellon’s CEO Todd Gibbons perfectly highlighted where technology is increasingly becoming a differentiator for banks and financial services firms 

“Client expectation around reliability, experience, and transparency is much higher than what provides have been used to as institutional clients want the look and feel of what consumers have gotten,” said Gibbons. And that’s been reflected in their partnership with firms such as Microsoft are creating solutions that were not previously imagined a few years ago.” 

Gibbons added in the session that BNY Mellon has become the largest manager of investment data in the world and where they are using Microsoft Azure, they really see data as being the next key asset class to compete on. “We provide clients the ability to consolidate data across many providers, as well as taking in third-party data, and to use AI and machine learning tools in helping to alleviate some of their data management headaches and enrich the data clients can use,” he added.  

One of the standout sessions was the Future of Post-Trade: Global Platforms & Strategic Partnerships which featured representatives from the biggest players in securities services.  

Perhaps unsurprisingly, the continued industry effort to drive down costs was a predominant theme of the panel, with firms are looking at their end-to-end, front-to-back operating models for further efficiencies and more targeted services. HSBC’s Stephen Pemberton, global head of product for banks and broker dealers, explained that they are turning to co-creation solutions with clients that are mutually beneficial to removing inefficiencies and therefore lower costs. 

The persistent focus on costs is also probably why firms are still plugging for industry utilities that will help mutualise functions that don’t provide any meaningful revenue and are costly to operate.  

Meanwhile, SWIFT further solidified their position as a key market infrastructure and network provider for the securities services industry through its strategy overview session. Despite the organisation predominantly providing payments services, it is set to become a key partner within capital markets as it looks to play a key role in minimising securities settlement failures and being a conduit for trade data.  

One of the last panels of the week saw an interview with State Street chief executive officer, Ronald O’Hanleywhere the custodian’s front-to-back strategy was discussed in depth. O’Hanley addressed the growing competition between asset servicing providers, who have made their respective moves when it comes to front-office data over the past couple of years, and claimed he was much more worried about competing with Excel spreadsheets within asset management firms than he was about BlackRock’s Aladdin. 

“A lot has been talked about with the competition between Aladdin and Charles River, Aladdin, Bloomberg and Charles River,” said O’Hanley. “The biggest competition is not – in our mind – them, it’s actually the installed base of what’s in an asset manager, the biggest competition is an excel spreadsheet.

The important of data cannot be understated and O’Hanley emphasised the opportunity and the challenge to do so, adding that having the full front-to-back view was essential for the custodian. 

Outside of the post-trade specific discussions, there were also takeaways about the increasing risk of cyber-crime in a remote working environment, the importance of sustainability and environmental considerations across business decisions and the need for action on equality within our industry and society as a whole. 

It is fair to say that this year’s pandemic has put everything in perspective for financial services firms, leading to Sibos discussions ranging from digital transformations within their own organisations to the fragility of our planet and the importance of making the world a better place for all.