[ U P D AT E ]
Securities
services could
transition to
‘self-service’
model
THE MOVE TOWARDS SMART
CONTRACTS AND DLT PRE-
SENTS A NEW OPPORTUNITY
FOR CUSTODIAN BANKS TO
GRANT CLIENT ACCESS TO
THEIR OWN DATA.
C
ertain functions within securities ser-
vices will most likely move to a self-ser-
vice model as banks look to digitise their
business, according to Deutsche Bank’s top
technology expert.
Financial services firms are increasingly
implementing digital technologies in order
to automate manual, human-led process-
es that have been criticised for being too
error-ridden.
The move towards smart contracts and
distributed-ledger technology (DLT) has also
presented a new opportunity for custodian
banks to grant client access to their own
data, and could mean a transition to a new
“self-service” relationship.
“With digitisation, we have found the
more we can give back and put in the hands
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Global Custodian
Winter 2018
of the client, the better experience they’ll
get,” said Thomas Nielsen, chief digital
officer, global transaction banking, Deutsche
Bank.
“The development of smart contracts is
accelerating this, but at the end of the day
who are you going to trust to validate and
carry out those functions? This is where dig-
itised securities services firms can remain
relevant.”
While new technologies possess the po-
tential to disintermediate certain functions
traditionally performed by custody banks,
Nielsen believes it will instead allow them to
choose which services to specialise in.
“The future of custody banking and
securities services will largely centre around
where in the value chain you can pick to
service, with more data being captured on a
self-service basis,” Nielsen added.
“The more commoditised functions of
transaction banking and securities services
will most likely become self-serviced, but
the more high-touch and complex functions
will still be carried out by banks.”
The securities services industry has been
challenged with keeping up with the pace
of new technologies and digitisation, while
other industries such as retail banking
and trade finance have found it easier to
transition.
Speaking at The Network Forum in
Singapore earlier this month, Jason Nabi,
global head of innovation at HSBC Securities
Services, explained how custodians will have
to align themselves closer with FinTechs
that are delivering these technologies in
order to adapt.
Banks are developing closer ties to
FinTechs such as Digital Asset and R3 that
are bringing revolutionary technologies to
capital markets. They are also opening more
innovation labs across the world that are
experimenting with AI, big data and robotics
to deliver new services.
Deutsche Bank most recently opened a
new innovation lab in Singapore, its fifth
lab globally, with the aim to “find the best
start-up opportunities across Asia-Pacific”,
it stated.