[ U P D AT E ]
BNP Paribas
Securities
Services chief
says custodian
has more than 20
‘significant’ tech
projects
BNP PARIBAS IS HALF-WAY
THROUGH A FIVE-YEAR
PROGRAMME FOCUSING ON
IMPLEMENTING DIGITAL INITI-
ATIVES ACROSS THE GROUP.
C
ustodians have been relentlessly bom-
barded for several years now at industry
conferences and in editorials with apocalyp-
tic prophecies warning them that technolog-
ical disruption was going to obliterate their
industry.
However, they now appear to be on more
solid footing as businesses increasingly
invest and beta test new products and
solutions.
Having seen taxis, high-street retailers
and travel agents, among others, disinter-
mediated by disruptors, banks have finally
grabbed the initiative, in the opinion of
Patrick Colle, general manager at BNP Pari-
bas Securities Services.
“Banks are very well-positioned to react
to change, primarily because of their sheer
scale,” said Colle. “While our size admit-
tedly precludes us from being as nimble as
FinTechs, custodians and asset servicers are
investing heavily into technology change.
At BNP Paribas, we are two years into a
five-year programme to spend €3 billion
across the group on digital initiatives cov-
ering blockchain, AI, e-commerce, and the
customer interaction space.
“Having gone from a small number of tech
initiatives, we now have more than 20 dif-
ferent significant projects within securities
services.”
This scalability of banks also makes it
incredibly difficult for small FinTechs to
compete on an equal playing field, although
Colle acknowledged that financial institu-
tions and technology companies were be-
coming increasingly interconnected through
strategic partnerships.
“I doubt there will be an ‘Uberisation’ of
the custody industry by a small FinTech,
although custodians are transitioning more
and converging into technology companies.
There has certainly been a growth in cus-
todians and other providers buying equity
stakes in FinTechs, such as Fortia in the
depositary bank space,” he said.
While there are some exceptional FinTech
companies around, the market is at sat-
uration point and a rebalancing of supply
is inevitable. A number of FinTechs have
undergone multiple fundraising rounds
which has distracted them from product
development, while others have exhausted
all of their available capital and gone out of
business. So volatile is the FinTech indus-
try that some conservative suppliers and
vendors are refusing to work with start-ups.
Others point out certain FinTechs are guilty
of over-extending themselves or developing
products in markets where they are not
necessarily needed.
The biggest threat of disintermediation
to banks, however, comes from the big
technology groups, a number of whom are
providing payment services and are looking
for ways to generate revenues by leveraging
open banking regulation in Europe. These
companies’ sheer net worth means they are
unencumbered when investing in new prod-
ucts. Apple became the world’s first ever $1
trillion company by market capitalisation,
while Amazon reached a similar milestone
shortly after.
Custodians have done well engaging with
the small FinTechs, but now is the time to
improve their relationships with the major
players.
Fall 2018
globalcustodian.com
15