[ M A R K E T
R E V I E W
|
T E C H N O L O G Y ]
T
he idea of human beings being
made redundant by robots is not
the most edifying. But the benefits
of using robots to assume human tasks in
finance are undeniable from an efficiency
and cost perspective.
Getting down to a situation where
robots take over processes in the asset
servicing world is currently happening.
Still, in a recent poll at a GC Sessions
event only one in 39 people believed their
role would be automated by the end of
2020. So what is the truth?
There is no doubt about the potential of
robotics to transform things at some point
in the future.
“In many ways, the business world’s
focus on robotics or digital is reminis-
cent of the dot.com era in the late 1990s,
dominating headlines and generating
new buzzwords,” says Jeff Conway, chief
executive, EMEA at State Street. “Hype
aside, digitisation – where information is
moved from outdated analogue systems to
an up-to-date digital format – is changing
the way we work and provide services to
“Robots can help with
enhanced process
automation, creating
systems that leverage
learning capabilities for
judgment orientated tasks.”
CHRIS ROWLAND, GLOBAL HEAD
OF CUSTODY, JP MORGAN
clients to enhance their overall experi-
ence.”
Robotic Process Automation (RPA),
while still relatively new, is one of the
main areas where robots are already
replacing humans to handle repetitive
functions. The focus currently is in rou-
tine, rules-based manual tasks—account
opening and system entitlement manage-
ment are two examples—where machines
can do jobs much more efficiently and
quickly than humans.
34
Global Custodian
Summer 2017
“Investment banks are using RPAs
wherever there are repetitive processes
like data entry,” says Nick Fry, direc-
tor, Sapient Global Markets. “In the
post-trade world, RPA can add value by
automating those repetitive duties. It is
quick to implement, scalable, improves
accuracy and productivity. It is also more
cost-effective than having people do it;
robots don’t have holidays or sick days.”
Robo-custodians
The biggest custodians have been ready-
ing themselves to see how they can best
apply robot technology to their business
processes ranging from robo-advisory
to trade surveillance to risk manage-
ment. Last year, State Street launched a
digitisation project called ‘Beacon’ with
the aim of transforming its business
from existing manual processes to digital
from which it expects to generate $550
million in estimated annualised savings
over the next five years. The idea is to
have machines take more of the service
load. And its clients are already seeing
the benefits.
“Through Beacon, one of our clients,
a large asset manager, has seen faster
intra-day processing,” says Conway. “This
has provided the client with a clear view
of services and led to less back-and-forth
with inquiries. Beacon has been able to
integrate alerts into one tool across pro-
cesses, which has given our client roughly
15-20 minutes back to their working day,
which is significant in this industry.”
Conway believes that robotics and
technologies like blockchain have
the potential to significantly change
settlement processes in the future and
to remove the inefficiencies and errors
that have characterised these in the
past. However whether this will lead to
the removal of securities depositories is
another matter.
”Some believe real-time settlement
finality will call time on the central secu-
rities depositories,” he says. “However,
this is over-simplifying things. Blockchain
could certainly help automate some com-
ponents of the settlement process such as
reconciliation and corporate actions, but
CSDs are likely to play an integral role in
any blockchain environment.”
In the safe zone
Conway says that central securities
depositories have been instrumental in
establishing industry-wide standards and
monitoring the behaviour of market play-
ers. Rather than being replaced, their role
with evolve to retain a governance role in
a blockchain framework.
At the same time there has also been a
forceful case made for blockchain leading
“In the post-trade world, RPA
can add value by automating
those repetitive duties.”
NICK FRY, DIRECTOR, SAPIENT
GLOBAL MARKETS
to a decline in the custodian intermedi-
ation role. This, again, appears to be a
misnomer. According to Conway, there
will still need to be on and off controls
to blockchain which entails the need for
so-called digital custodians who can over-
see this and create and maintain smart
contracts.
It is a valid point and one which is
echoed by others. In a complex and
dynamic world like finance it is inevitable
that humans will be needed to oversee
machines.
“There could be a scenario where you
have technology on top of technology
on top of technology,” says Fry. “But the
process needs to be managed. With RPA,
for example, if you are taking away from
processes the danger is that new people
come in and don’t understand what has
gone on before. Things need to be robust
or there could be issues down the line.”
There are other counters to the robotics
argument. While many companies are
looking to initiative robotic processes,
cost still remains an issue. In some cases,
getting a robotics project off the ground
can be a hard sell and use of technology in
securities processing is still seen as a sub-
sidiary concern to the main business lines.