[ I N - D E P T H
the same speed, with the pace of change
always increasing.
In addition to working at a more intense
level, the idea of being more collaborative
with both FinTechs and rival custodians
has prompted a cultural shift in order for
them to both co-exist and work together.
“FinTech is prompting a new way of
thinking; the day you work with a start-up
you have to change your approach,” says
Jean Devambez, global head of digital
and acceleration, BNP Paribas Securities
Services.
“We have realised for certain areas we
would not do everything by ourselves and
it would be more beneficial to cooperate
with start-ups and tech companies on
certain services.
“The cooperation between a bank and
start-up involves a lot of compromising
and flexibility, and installing a disruptive
solution within a bank that has been used
to going about things a certain way can be
challenging. But in return we bring capac-
ity and clients to the start-up and bring
them all the underlying requirements
they need to help them grow.”
It is this new perspective that has
helped forge a number of FinTech
working groups and eco-systems, such
as B-Hive in Brussels, that helps spark
creativity and innovation for securities
services.
“This can be quite powerful, as you ul-
timately want to work peer-to-peer, instil
an action-oriented mind-set and turn
collaboration and best practice sharing
into the new normal,” adds Euroclear’s
Verbeke.
In-house vs partnerships
FinTech is also encouraging custodians
to take a look at their existing services
and find a way to reposition themselves
so that they offer that same flexibility and
a tailored service that the start-ups can
provide.
Having an acquisitive strategy whereby
the custodian takes a minority stake in the
FinTech is helping facilitate this, whereby
they can impart their own knowledge and
working practices for the start-up to win
clients, and in return they gain the tech-
nological knowledge which they can use
to amend and launch new products.
This strategy however, is largely carried
out on a case-by-case basis, according to
BNP Paribas’ Devambez.
Last year, BNP Paribas acquired a mi-
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F I N T E C H ]
nority stake in FinTech firm Fortia Financial Solutions, with the
aim of implementing its technology within its own depositary
banking business.
“Sometimes you go for a true commercial partnership, and oth-
ers you don’t want to imprint too much of the bank on them.
“FinTechs can bring a new approach and challenge us in a
positive way to reposition our offering. It is quite difficult for
FinTech start-ups to acquire their own clients, largely because of
the short-term constraints on their business. Some are coming
with very interesting propositions, and we look at them differ-
ently to what we traditionally offer. It is more of a challenge
“FinTech is prompting a new way of thinking; the day you
work with a start-up you have to change your approach.”
JEAN DEVAMBEZ, GLOBAL HEAD OF DIGITAL AND ACCELERATION,
BNP PARIBAS SECURITIES SERVICES
rather than a threat,” says Devambez.
However, some banks are now evolving to a point where their
FinTech capabilities are located in-house, and instead are part-
nering with other banks and leaving the FinTech start-up out of
the loop.
Most recently, BNY Mellon and Deutsche Bank launched a
chatbot-to-chatbot communication solution developed during
a 24-hour hackathon at BNY Mellon’s Singapore Innovation
Centre.
The move shows how bank are now more open to collaborate
with one another in order to enhance non-differential processes
in the middle- and back-office.
“What’s different here is the collaborative approach we took to
resolve a real speed and accuracy need for our clients,” said Jes-
lyn Tan, deputy head of global product management, securities
services, Deutsche Bank at the time of the launch.
“When we first brainstormed the issue, it was immediately
obvious that for a truly business-enabling experience, a fully
integrated solution in the form of chatbot connectivity was
required between both institutions.”
It is remarkable how custodians and securities services provid-
ers have had to make overarching changes to their approach not
only on technology but also client experience and interactions.
FinTech has stimulated collaboration in an industry that has
generally not worked well together in the past.
Most likely, the big banks will not have to worry about FinTech
taking over their space. The operational risks and costs associ-
ated with switching from an established bank to a FinTech has
put off most buy-side firms from making the move. However,
this does not mean the securities services industry can let their
guard down.
The rapid developments in DLT from FinTech’s shows the
potential for custodians to be disrupted from the value chain.
Furthermore, the capabilities FinTechs offer has made custodi-
ans look inwards to meet customer expectations.
The future is bright for both FinTechs and custodians and
collaboration will increasingly become a part of their technol-
ogy strategy. But when another player such as a Betterment or
Nivaura come to market with a compelling offer, it will be inter-
esting to see how nice everyone will play.
Summer 2018
globalcustodian.com
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