In April, Deutsche Bank launched an investor services business designed to replace direct securities services (DSS) and reposition the custody and clearing, agency securities lending and fund services businesses of that franchise into this new group.
Satvinder Singh, global head of Trust & Securities Services and Cash Management Financial Institutions provides three reasons for the repositioning. Firstly, the bank wants to reinforce its commitment to securities services clients and to this business. “We’re keen to take Investor Services to new heights by increasing our client focus and delivering a more integrated solution,” he says.
Secondly, in increasing its client focus, Deutsche Bank is increasing its dedicated investment in securities services as it sees more demand for ‘investor services’, with clients using the terminology to describe services that span clearing and custody, agency securities lending and fund services. “Some of the main clients we are focused on – investors – identify themselves more readily in the name,” says Singh.
Thirdly, in delivering more integrated solutions, Deutsche Bank sought to deliver more value to clients by harnessing the synergies that exist not just across the investor services team but deeper within the bank in areas like Corporate Banking & Securities (CB&S) and Asset & Wealth Management.
The bank began this process of delivering enhanced value through services such as dbIntegrate – the result of collaboration between CB&S and Global Transaction Banking (GTB) that provides seamless execution through to settlement. This offering, says Singh says has had enormous uptake. “We want to do more like that,” he adds.
To head up this strategy of integration, the bank appointed Rafael Moral to lead the new business. Previously head of Strategy and Business Development for GTB, Moral has been instrumental in creating cross-bank connectivity and developing strategy that leverages that connectivity to deliver integrated solutions to clients.
The genesis of the change in the delivery of custody services by Deutsche Bank going forward lay in an ambitious growth strategy, called Strategy 2015+. In the simplest of terms, the bank is looking to offer a broader selection of services to a broader selection of clients. An example of this expanded offering is in fund services, where the bank is engaging with its hedge fund management clients around AIFMD and is looking at models to combine custody with fund administration, investor services, multi-currency cash management and even prime brokers form CB&S.
Linked to that are the main external factors influencing the strategy: regulation and market harmonization, says Singh.
“Projects like T2S and the ASEAN Exchange Link are reshaping our approach and opening new opportunities.”
T2S or Target2-Securities is the harmonized platform for eurozone securities, while the ASEAN Exchange link will create a single market for securities in the South East Asia region.
“In Europe, we’re talking to some of the biggest names in global custody about providing local T2S connectivity,” says Singh. “In Asia, we were just appointed by the ASEAN Exchanges to provide FX, settlement and custody services to market participants in the new ASEAN Exchange Link.”
In order to create and deliver value Deutsche Bank looked across its client base and saw that these clients have much in common and they are affected by the same regulatory and market harmonization strategies. This causes them to demand value-integrated solutions, deep expertise and the security that comes with partnering with a strong partner committed to this business, says Singh. “Our Strategy 2015+ involves investment across three dimensions – our balance sheet, technology and people – in order to deliver that value.”
Singh uses the example of integrated, bespoke solutions in order to illustrate how the bank will deliver value in the new investor services business line. Firstly, Deutsche Bank is providing custody, but as part of a larger packaged solution tailored to clients’ needs. “For example Solutions like FX4Cash – that streamlines cross-border payments in more than 125 currencies – and dbOverlay – that makes currency hedging simple – deliver considerable added value,” he says. “In short, we’re building better, deeper relationships with our clients and we’re doing that by collaborating across the whole bank.”
Secondly, Singh notes a “real” thirst among clients for knowledge and guidance on the changing regulatory landscape and its impact on their business. “Our dedicated Market Advocacy team operates on a global basis and is there to share our expertise with clients,” he says.
“Finally, clients clearly see value in partnering with a provider that they know is in custody for the long haul. Deutsche Bank is one of the few providers that maintains Global Transaction Banking as a separate division, with all the investment, senior management attention and focus that this implies.”
The launch of the investor services business enables Deutsche Bank to decouple services and price separately those services, which have intrinsic value but were previously packaged as part of custody.
“We want to provide clients with choice, flexibility and transparency. So, they can buy packages from us or they can take a more modular approach. It’s up to them.”
Going forward, Singh believes the security of the new business hinges on commitment, expertise and reach to continue to be successful going forward. He notes that unlike its competitors, Deutsche Bank has kept transaction banking as a separate division within the bank. “We invest in it, focus on it, run it as a separate unit,” he adds.
He places emphasis on expertise in dealing with clients. “Going out there and talking to them regularly about the impact of regulatory change, for example, often leads us to doing more business with them,” he says.
Finally, reach. “Our global reach enables us to apply lessons from one region to another. Having a wide reach in terms of product offering is also crucial. It’s what enables us to build true end-to-end solutions like dbIntegrate.”
The Future of Custody: Satvinder Singh on Deutsche Bank’s New Investor Services Business
In April, Deutsche Bank launched an investor services business designed to replace direct securities services (DSS) and reposition the custody and clearing, agency securities lending and fund services businesses of that franchise into this new group.