Mark Wootton, regional head of local custody and clearing in APAC, BNP Paribas Securities Services
Distributed ledger technology (DLT) remains firmly on the agenda for 2021 and we expect to see projects continue with renewed vigour following some inevitable delays during the COVID-19 pandemic. Across APAC, we are seeing an increasing number of organisations complete small-scale projects to proof the technology, using this as a building block for further development. A lot has been said about infrastructure replacements, but it is in these tactical executions we will see DLT utilised to reduce stop points, or manual interventions in processing, which will help boost efficiency and reduce risk. We also expect to see further growth in smart contracts, as the industry looks for additional flexibility that cannot always be achieved by today’s structured and sequential messaging. To fully realise the potential benefits of these technologies, we will need to continue a partnered approach, working across the industry co-designing solutions. This will be vital to success.
Michael C. Bodson, president and CEO, DTCC
The extreme market volatility and volume experienced during the early days of the pandemic reinforced the critical role that market infrastructures play in protecting the safety and stability of the global financial system. The crisis also shined a light on the need for increased automation to strengthen resilience, reduce risk and costs and enhance efficiencies. Looking forward, we expect automation and FinTech to continue to shape financial markets, but unlike the past, new technology solutions likely won’t be implemented with a Big Bang approach. Firms will want to balance legacy systems and new technology for a period of time to mitigate risk and manage costs. We also expect to see an acceleration in companies wanting new products and services developed rapidly and incrementally to meet their immediate needs, rather than a wholesale overhaul that may take years or be cost prohibitive to implement. As new technologies grow in prominence and solutions are delivered, governance and industry standards will become all the more important to make sure they offer the same, or a better, level of risk reduction and protection for firms and investors.
Stephan Leithner, member of the executive board of Deutsche Börse and Clearstream chairman
Sometimes change can be seen from miles off, sometimes it comes (seemingly) out of nowhere. This year has shown us that there’s nothing that we can take for granted. For 2021, it will therefore be more vital than ever to ensure that our industry is sustainable, resilient and responsive. This is the time to take a hard look at our business models from all angles and, if necessary, to reimagine them. Think of what you do best – your business’s core purpose – and find ways to fulfil it in a new environment: where digitisation is poised to transform a securities industry that continues to be under substantial regulatory and cost pressure, where investor behaviour is changing with ever-growing demand for sustainable solutions, and where we must be able to respond quickly to unforeseen events. Let’s work together to create the securities industry of tomorrow.
Neil Vernon, CTO, Gresham Technologies
There has been a lot of discussion around how the connective power of APIs has the potential to transform relationships in the investment industry by improving data integration between investors, asset managers, and service providers. Certainly, as an industry facing numerous and diverse asset types and complex information exchanges on a daily basis, API integration should be at the top of the agenda. And with the unexpected conditions of 2020 accelerating moves towards digitalisation, we’re seeing the industry grow more confident with API integration as a result. In 2021, while banks should not forget to invest in user interface, they should prioritise investment into API connectivity as this is where a lot of value to corporates lie. Those banks and corporates that don’t modernise their offering to keep up with the speed the market is currently innovating at will undoubtedly fall behind.
Nasser Khodri, EVP, sell-side, capital markets, FIS
COVID-19 has amplified the challenges facing an industry that was already grappling with huge pressures on its margins and routes to growth. The firms that succeed in 2021 will be those that master the art of doing more with less as they support growth initiatives — and that is only possible with the aid of advanced technologies. Artificial intelligence and machine-learning solutions are increasingly enhancing efficiency and stripping out the cost for sell-side firms. For instance, in securities financing, optimisation algorithms are being used to improve the matching of borrowers and lenders to improve financial outcomes. Against a backdrop of cost pressures, sell-side firms will also overhaul their business through cloud and managed services to enable employees to work from home. Our 2020 FIS Readiness research found that 52% of the sell-side firms surveyed were seeking to reduce office space as a result of the pandemic, with around 47% of total respondents saying they were offering part-time, remote working to make substantial cost savings on areas such as office space.
Bernard Fripiat, head of channel strategy, SimCorp
In 2021, we see the open platform as the next frontier, moving on from the provision of front-to-back solutions and services. This will see the creation of client-driven ecosystems, comprising partnerships with, and integrations to, multiple providers in the broader FinTech space. These co-created outcomes, can be easily delivered via the servicing platforms, and will provide the flexibility and optionality clients need to compete more effectively. This is especially important for firms who have had to stall their own innovation projects, as a result of the last year. While these partnerships, which include those with asset servicers and custodians, form a new co-dependency between service providers, to offer something much bigger than themselves, it is ultimately the institutional investment industry that will be its biggest beneficiary: receiving complete solutions, that smoothly integrate to custodial services and fund administration, for a more streamlined and effective investment process.