Back office to the future
The 1985 film “Back to the Future” sees Michael J. Fox whisked into a Hollywood vision of 2015, featuring technological marvels like hover boards and flying cars. The marvels of the real 2015 are smartphones, connectivity and technological disruption; advancements that have not just disrupted business process but that have converted brands into common verbs like ‘Google it’ and ‘Uber over’. Technology is deeply embedded in day-to-day life: for custodians, diverse digital transformations are converging in 2015 to revolutionise business practice as we know it.
Now the key enabler of our client communication is the digital world. Our publications, whitepapers and industry commentary are broadcast via LinkedIn and Twitter. Our website offers resources for our clients to access at any time and provides links to our client-based, interactive portal.
And a new expertise has developed on custodian and client side: data interpretation and visual representation; we have seen a striking increase in demand for expertise to convert the data to present it in visually compelling ways.
Web-based applications changed the way clients were able to view data fundamentally: as the custodian was able to present data in increasingly visual ways, the client could more quickly interpret and act on that data. The evolution began with the creation of dedicated applications and continued with their integration on web portals, enabling clients to navigate through them.
BNP Paribas Securities Services has seen first-hand how beneficial the development of interactive applications can be for clients. For example, data navigation tools have completely changed the way clients receive and interpret data for their own clients. Since this data is commonly presented via apps for mobile devices, they are able to communicate the information in a more transparent and dynamic way.
The core of a custodian’s business is processing, and this is also going through a digital transformation. A lot has been achieved in this space, including workflow management of the operations themselves. Custodians continue to support industry-wide initiatives to improve trade processing times and have invested considerably to support the implementation of T2S and other industry developments.
Beyond the improvement of operational processing capabilities, we are also looking to optimise our time-to-market for new products and services. BNP Paribas Securities Services is the first financial services provider to apply Product Lifecycle Management to such processes. This approach is advancing our product teams by streamlining digital processes across global operational, IT, legal and compliance departments. By creating a single method for product teams to follow around the world, the common language and consistent project documentation gives full visibility of all our product-related updates and initiatives to teams. PLM will enable us to ensure alignment of investment with pre-defined strategies, get transversal collaboration for developments and identify opportunities and threats more easily.
Custodians have long been responsible for guarding the data of their clients, so the concept of ‘big data’ is hardly revolutionary. The novelty lies rather in the shift in how clients are using data for analysis and development of products and services. The sheer amount of data being produced is higher than ever before and the insight from it is invaluable. Custodians need to continue to provide more sophisticated tools and applications in order to enable clients to use their data. Data analytics is a good example of how interactive tools are enabling our clients to explore their data in the way that enables them to exploit it – with strong drill-down capabilities.
Custodians have been working with blockchain technology since 2011 to analyse the market opportunities for the industry. The most ambitious players believe that file-storing, the execution of code and even business administration will use the infrastructure. Custodians who embrace it will be very well-placed in the future to gain competitive edge.
Huge investment is pouring into financial technology start-ups: Accenture estimates global investment to have reached USD 12.21 billion in 2014, up from USD 4.05 billion in 2013. The astonishing jump can be attributed in part to technological maturity and in part to investor appetite. The level of excitement surrounding technology initiatives in finance today should also be tempered by reality.
It is the combined power of all these digital trends coming together at the same time that will have the most impact for custodians and their clients. We may well be Ubering over to see clients on hover boards or in flying cars in another ten years, but you can be sure that smart phone and digital transformation will be fully integrated with them.
Read this article as it appeared in Quintessence magazine (Winter 2016)
"Back office to the future"