[ M A R K E T R E V I E W | T E C H N O L O G Y ]
The 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 reminiscent 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 “ Hype aside , digitisation – where information is moved from outdated analogue systems to an up-to-date digital format – is changing the way we work and provide services to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 experience .” 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 routine , rules-based manual tasks — account opening and system entitlement management are two examples — where machines can do jobs much more efficiently and quickly than humans .
“ Investment banks are using RPAs wherever there are repetitive processes like data entry ,” says Nick Fry , director , 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 readying themselves to see how they can best apply robot technology to their business processes ranging from robo-advisory to trade surveillance to risk management . 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 processes , 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 securities depositories ,” he says . “ However , this is over-simplifying things . Blockchain could certainly help automate some components 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 players . 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 intermediation 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 oversee 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 subsidiary concern to the main business lines .
34 Global Custodian Summer 2017