Your guide to 2021 in securities services part two: Digitalisation

Global Custodian has compiled a series of predictions for 2021 from some of the leading voices in the securities services industry, part two focuses on digitalisation.

By Jonathan Watkins

Penny Biggs, head of strategy for corporate & institutional services, Northern Trust

The digitalisation of securities services will increase in pace. This trend is being accelerated by the COVID-19 pandemic, as the work-from-home environment has necessitated greater use of technology industry-wide and is driving the digitalisation of everyday processes. This in turn will drive the need for intuitive digitalised investor experiences, including for real-time data and tools to help users make sense of it. Securities services providers need to incorporate these expectations of investors into their service offerings – driving high-end self-service solutions and maximising distribution potential. As investment managers grapple with managing rising costs and driving bottom line performance, and asset owners seek increased governance transparency and control, we see more organisations re-assessing their operating models and focusing more explicitly on areas that are core to their businesses. We see increasing opportunities for asset servicers to take the lead across a broad service spectrum, from the front-office solutions, to data management, to outsourced trade execution – the latter seeing the most rapid growth potential.

Margaret Harwood-Jones, co-head of securities services and financing, Standard Chartered

2020 has accelerated the use of digital solutions. In our recent think tank series, we engaged practitioners across the settlement chain on ideas to address the intermediation lag in the custody chain. To really solve the challenge will require multi-lateral collaboration across the industry and a combined solution to digitise & democratise settlement data throughout the chain. We see a real commitment to such a collaboration and are excited about the potential solutions it will drive in 2021. Technologies such as distributed ledger offer an opportunity to develop a single book of records & we are starting to see solutions using this technology that fit within the broader ecosystem although delivery may extend beyond 2021. The theme of digitisation and collaboration, accelerated by the pandemic, will continue into 2021 and drive key changes in the settlement chain. We believe seeing a greater adoption of digital technologies and an extension of data led solutions to more than two parties will improve resilience and speed in trade processing.

Matt Davey, head of coverage, marketing and solutions, Societe Generale Securities Services UK

Asset servicers are investing in digitalising their operations to become more efficient and to improve the client experience. However, asset servicers will also need to adjust their commercial model, from one driven by assets, to one where they partner with clients to create value in ways other than giving a lower price. Greater collaboration between asset servicers and their clients and partners could help to move the industry towards a Platform model based on; open data architecture, the use of APIs and common data interface standards and inclusion of third-party solutions. New technologies will most likely improve the way that custodians interact with their clients, including machine-to-machine links. Technologies such as AI will not replace the core activities of asset servicers, but should deliver client benefits and greater efficiency. Above all, leadership and cultural change are keys for success in this new digital model.

Francis Jackson, CEO, RBC I&TS

Modernisation of asset servicing has advanced considerably in recent years, particularly with the onset of the coronavirus pandemic which has acted as a catalyst for firms to standardise, automate and implement efficiencies and technology solutions across the industry. As a result, in the coming year and beyond, we expect custodians and asset servicing providers will continue to prioritise digitisation initiatives in order to remain competitive. At RBC I&TS, our digitisation journey focuses on interoperability, unlocking the value of data, striking the right balance between streamlining existing core platforms and upgrading functionality. We are exploring technological solutions which enable simpler and faster processing and give more time for high-value, strategic activities that improve services and support our clients. The right technological solution also provides greater ability to collect more detailed processing data, a key component that ensures continued improvement of capabilities.