Global Custodian Securities@Sibos 2019 - Page 21

[ D ATA ] investments. “We believe clients will pay a premium to custodians for performance analytics supported by APIs (application programming interfaces) which are high- er frequency, instant and more accurate than what they are currently receiving, namely an end of day report,” says Pearce. Others agree custodians need to tailor their data products properly. “Any cus- todian looking to generate a meaningful revenue stream through creating stand- alone data products for the broader fi- nancial community by applying advanced analytics to their own data exhaust will only be able to do so if their data is truly unique and the analytics off the back of it are also equally impressive,” explains Matthias Voelkel, partner at McKinsey. “This is a high bar. I believe custodians should absolutely be exploring big data, but the most interesting use cases might not be stand-alone data products for the broader market, but rather value-added products for their existing customers.” Is mining big data a big regulatory minefield? Having been lightly – if at all – super- vised, the big data policies at technology companies are now firmly under the gaze of regulators following the aftershocks of the Facebook/Cambridge Analytica scandal. The UK’s Financial Conduct Authori- ty (FCA) has gone further and recently The big data tightrope warned banks about data misuse, with its Custodians have a lot of information head Charles Randell affirming the topic about clients and markets sitting idle on was a major issue and now top of the their desks but finding a way to mone- regulator’s agenda. Custodians therefore tise it is going to be hard. If clients are to need to tread carefully, particularly as purchase big data driven analytics or spe- a number of lawyers have advised fund cially tailored solutions, then the products manager clients to be extra diligent when need to serve a useful purpose and be set using third-party data analytics. apart from the competition. If the custody Prudence around data collection and industry manages this, then data analyt- usage is unconditional following the in- troduction of the General Data Protection ics could turn into a nice regular income stream, offsetting some of the declines Regulation (GDPR), along with its hefty fines for non-com- pliance. “It is now the custodians’ job to enable “GDPR compli- clients to have better and more effective ance is a must for access to their own data.” all companies, and it is critical that DAVID BRENT, JP MORGAN providers ensure data is being used seen elsewhere in the business, such as in appropriately and there are no breaches securities lending or FX execution. of the rules. Data security is also abso- Banks do need to be conscious though lutely pivotal, and this can be achieved of the public and political criticism about by having state of the art cyber-security big data following the abuses revealed at protections in place,” says Voelkel. some of the major technology companies. Pearce adds data security and data integrity are essential for custodians mov- Regulators have forewarned banks that any exploitation or mishandling of data ing forward. “It is in the industry’s col- will be investigated, and this guidance lective interest that we all work together should be onboarded entirely by custodi- to achieve the highest standards of data ans. While banks need to be bold in their integrity and security. We are incredibly careful in terms of the data we access, and big data ambitions, they must also be compliant in the approach they take. how we amalgamate it.” January 2019 Securities@Sibos 21