[ I N - D E P T H
|
F I N T E C H ]
tion could be problematic,” says Vijay Mayadas, president, global
fixed income and analytics, Broadridge.
“Introducing DLT into the core plumbing does not make that
much sense, but what may work is introducing new technology
higher up the infrastructure stack.”
Full disruption would require coordination and a broad ac-
ceptance among not only entrenched securities services firms
that are competing with one another, but also broker-dealers,
investors and regulators.
Rather, banks will look to collaborate on areas that have become
commoditised from the top-down, and therefore easier to replace.
The McKinsey report outlines utilities in the securities ser-
“Because so much has been built up on established systems,
too much disruption could be problematic.”
VIJAY MAYADAS, PRESIDENT, GLOBAL FIXED INCOME AND ANALYTICS, BROADRIDGE
vices industry will be formed whereby banks and FinTechs will
collaborate as the value-chains blurs and firms increase their
outsourcing of less-critical functions.
These utilities are being rolled out by technology and FinTech
companies across multiple areas, including KYC, collateral man-
agement, clearing, reporting and data management.
“We generally work with multiple firms at the same time. If we
can help a network of banks then the whole industry benefits.
The goal is to roll out new technologies across the network of
banks, so if you are a large bank and are looking to mutualise
and drive innovation around your post-
trade stack it makes sense to work with
a vendor that has other banks on that
platform,” adds Broadridge’s Mayadas.
Keeping secret
However, the problem with collaboration
is for many banks this is new to them.
They are not used to negotiating with
competitors and to get anywhere requires
a substantial amount of time and effort,
particularly with blockchain.
This was evident in 2016 when Goldman
Sachs decided to withdraw from block-
chain consortium R3, a company it helped
to found. Its departure was then followed
by Santander, Morgan Stanley and then
JP Morgan.
These banks have all now devised their
own technology strategy which they see
can be pursued without being a part of
collaborative working groups.
In areas such as artificial intelligence
and robotics which have the potential
to significantly enhance efficiencies and
change the way securities services firms
interact with their clients, multi-collabo-
rative models could appear less likely.
“The trend within DLT is to collaborate
with other custody banks to gain traction.
Developing solutions in isolation is not
the way forward, especially in relation
to market infrastructures. With artificial
intelligence (AI) it is less so as we want to
provide that value add to our clients. We
are working with regulators on AI but we
also see it as being a trend to drive to our
clients the benefits of using the technolo-
gy,” says Northern Trust’s Chapman.
“With AI and data analytics the smaller
Fintech companies are helping drive
innovation. W e are spending a lot of time
working with these companies to identify
which ones add value to our data strate-
gies. We have moved away from start-up
incubation and hubs and are more direct
with Fintech providers that are involved
in AI.”
Data management is becoming a bigger
part of custodian’s offerings, and Fin-
Techs that provide the AI technology to
help process massive amounts of data
and develop the algorithms that can solve
inefficiencies will be leading the way.
A new perspective
No matter what way custodians look
at it, FinTech has brought about a new
perspective. No longer can they operate at
38
Global Custodian
Summer 2018