From legacy to digital

How are providers of established securities services getting to grips with the opportunities that new technologies provide?
By Richard Schwartz

Sponsored by IHS Markit

Over February and March 2021, IHS Markit and Global Custodian undertook a survey designed to explore the future landscape for banks engaged in transaction processing. With the ever-present demand from clients for speedier and improved services along with new opportunities to exploit technological advances, the webinar drew on the survey findings to explore the practicalities of moving to a more digital and automated environment for data.

An online poll at the start of the session showed that 55% of webinar participants thought replacing legacy technologies and manual processes was the most pressing priority for service providers. In the survey itself some 65% of respondents said that responding to client demands for digitising access to data was a first or second priority.

Richard Schwartz, head of research at Global Custodian began by asking panellists if clients were actually pressing for digitisation itself or rather the benefits that digitisation can bring.

“It’s a little bit of both” was the broad consensus.

Brittany Garland, executive director, platforms and regulatory compliance, IHS Markit, drew an analogy with the digital retail experience. When ordering a pizza online, she noted, “You can choose different toppings and track your order from acceptance to delivery. Because we’re getting used to technology and data in our day-to-day lives, it’s coming up more and more in our work lives.”

Confirming the common retail experience of instant availability and gratification through personal mobile devices, Chris Cox, EMEA head of securities services and global head of data, digitalisation and strategic projects, Citi, agreed that such expectations are definitely leaking into the institutional space. “There is no reason, frankly, that we shouldn’t be able to deliver that to our clients,” he added. “It will allow our clients to make better decisions and run their businesses more effectively.”

He suggested, however, that the digitisation of the processes underpinning the market is a larger challenge, owing to the accumulation of different architectures. “In many instances, we have very robust architecture, so clients already expect very high levels of performance from us in terms of safety, security and resilience – all things which, frankly, have been delivered.” There will therefore need to be a process of transition, even if the requisite technology is already available.

Coming from the domain of tax processing, an area that has typically been one of the more challenging to automate, Steve Vescio, global head of tax services, Brown Brothers Harriman, said the task is complicated by constantly changing requirements. “Especially where there are multiple layers in processes that involve third-party governmental authorities it becomes a much more profound challenge,” he said. “To recover taxes from a government outside of the borders of your particular jurisdiction through a reclaim is a tremendously paper-intensive process, with a lot of documentation and wet ink signatures.” While compliance has historically been cumbersome, he argued that digitisation would enable flexibility and ease of adaptation of compliance models to accommodate regulatory changes.

At the heart of digitisation efforts, said Garland, is the process of converting information into units of data, which can then be used to enable the technology. “Once you have unlocked that data, you can use that data to inform your business decisions and outcomes; that is what we are trying to facilitate for our clients,” she explained.

“Data is what our clients want and digitisation is the delivery of that,” said Cox. “Technology is an enabler both to do existing things more efficiently, but also new things. It’s the automation of repetitive or manual processes, moving people on to higher value activities, at both the client end and our end, but can also be the fundamental redesign of an industry practice or the creation of a totally new product or service applying these new technologies.”

Asked about areas where further automation would bring most benefit in the short to medium term, Garland cited the account opening process. “I think we can get some quick wins from introducing a technology platform to continuously reshare some of the similar pieces of information that are requested over and over and over again,” she said. “I heard from one of our clients on a panel who said that they had to provide their BIC code over 200 times in six months, adding that, ‘Surely we can build something out to facilitate this process’.”

Cox meanwhile was keen to distinguish between quick wins and big wins. As an example of the former, he said, “There isn’t a client we talk to that wouldn’t love better information on the transactions that are going to settle and those that have challenges or need exceptions management.” His own firm had been focusing on productivity in clearing and settlement to the point that it could now regularly predict up to 90% of fails. Big wins, however, would come from tackling what he called “the thorny, multi layered fragmented challenges of client onboarding, tax, or KYC”. He added, “Those things take a lot more time to unpack as there are a lot more elements to the process,” he said, “but when you do get that right, you can have a much more profound, much more systemic impact.”

While agreeing, Vescio wondered if progress in these domains would require a collective effort. “It needs to be a big voice. It needs to be a broad adoption, in order for there to be real power in the impact,” he said.

“I don’t think it’s a resistance to become digital,” Garland said. “I just think you really need to approach it with an open mind and a will to see the journey through.”

Nor is this a journey with an obvious final destination. “Our objective is to try and find new things to delight the clients, move them up the value chain and give them time to think more strategically about their businesses,” said Cox. “Our job is to support our clients’ growth. Every day, there are new things that are possible. I think the envelope is going to continue to be pushed.”


Chris Cox, EMEA Head of Securities Services and Global Head of Data, Digitalisation and Strategic Projects, Citi

Brittany Garland, Executive Director, Platforms and Regulatory Compliance, IHS Markit

Steve Vescio, Global Head of Tax Services, Brown Brothers Harriman

Richard Schwartz, Head of Research, Global Custodian