NEW YORK, June 20, 2017 (GLOBE NEWSWIRE) -- Custodian banks are embracing emerging technology like blockchain and big data analytics to help clients in their digital transformation, according to a new TABB Group report “Safekeeping Empowered: Reimagining the US Custody Business.”
Commissioned by BNP Paribas Securities Services, a leading global custodian, TABB Group’s research team interviewed a select group of sell-side senior executives (COOs, heads of operations and heads of technology) at mid-sized banks and brokers in the US regarding their technology priorities and their expectations from custodians.
“As a top five global custodian, staying ahead of market developments is crucial, so we worked with TABB Group to identify the technology trends that are shaping our industry in the US market,” said Bruno Campenon, Head of the Financial Intermediaries & Corporates Client Line, BNP Paribas Securities Services. “The survey results validate that the advanced technologies we are already developing globally, such as distributed ledger technology and artificial intelligence, position us well to help our clients succeed in a changing digital landscape.”
Strategic Priorities of the Sell-Side
The priorities of the sell–side consumers of custody services, particularly mid-sized banks and brokers, are driven by the need to achieve value, comply with regulation, aggregate data and reduce costs. When asked about their most important technology initiatives, respondents rated cybersecurity (19%), the need for a client-driven user interface (19%) and data aggregation across the enterprise (15%) as their top priorities.
In addition to their technology development projects, respondents were also asked about their non-technology priorities. Regulatory compliance (22%) ranked number-one overall, with achieving operational efficiencies to create an automated operating model (20%) and data quality (15%) were also noted.
Looking ahead, over the next five years, respondents expect their own operational efficiency to be impacted most by blockchain and distributed ledger technology (66%), regulatory technology to help them better navigate regulatory compliance (60%) and big data analytics (33%).
What the Sell-Side Wants
The survey also looked at what mid-tier sell-side custody clients are looking for from their existing service providers and how they believe custodians should be prioritizing new technology to advance their relationships.
When asked what is important when evaluating a custodian, the following ranked most highly: knowledge of the client’s business, easy-to-use technology, strength of balance sheet and reputation for innovation.
When selecting a new custodian, respondents focused on elevated levels of customer service (18%), value in return for their custody fees (18%), operational expertise (16%) and innovative technology offerings (14%).
When asked what specific areas of technology respondents wanted their custodians to invest in, cloud computing and storage where clients might migrate their own applications, digital identity or biometric technologies as part of multi-factor authentication methods to mitigate security risks, and distributed ledger technology ranked highest.
The Future of Custody
U.S. sell-side customers of custody services expect their custodians to keep up with emerging technology trends and automate wherever possible. When asked what aspects of securities servicing they would most like changed in the next three years, 34% noted an ease of regulatory constraints, while 27% noted automation of manual processing. Capital constraints (16%) and collateral optimization (13%) also rated.
“We found that the custody industry is set for transformation in terms of the technology they use, while the focus on customer service reigns supreme,” said TABB Group Senior Analyst Dayle Scher, who authored the report. “Adoption of automation for remaining manual processes, combined with better data analysis, are critical enablers of the high-touch coverage the sell-side so covets.”
An executive summary of the TABB Group Report “Empowering Safekeeping: Reimagining the US Custody Business” along with a 90-second video interview with TABB Group Analyst Dayle Scher and Bruno Campenon of BNP Paribas is available here.
For more information or to purchase the report, contact info@tabbgroup.com.
About TABB Group
TABB Group is the international research and consulting firm focused exclusively on capital markets. For 14 years, TABB Group has been helping business leaders gain a truer understanding of financial markets issues to develop actionable roadmaps and approaches to future growth. By accurately assessing their customer base, competition, and key market opportunities, TABB Group works with senior industry leaders to make critical decisions about their business. For more information, visit www.tabbgroup.com.
About BNP Paribas Securities Services (www.securities.bnpparibas.com)
BNP Paribas Securities Services, a wholly owned subsidiary of the BNP Paribas Group, is a leading global custodian and securities services provider. Backed by the strength of the BNP Paribas Group, we provide multi-asset post-trade and asset servicing solutions for buy and sell-side market participants, corporates and issuers. With local expertise in 36 countries and a global reach covering 90+ markets, our network is one of the most extensive in the industry, enabling clients to maximize their investment opportunities worldwide.