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Do or die in the digital age
Do or die in the digital age
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Do or die in the digital age

23/02/2017

Author : Philippe Ruault, Innovation and Digital Transformation at BNP Paribas Securities Services

Embracing change is vital if securities services are to avoid being left behind by the technology revolution

img_bp2s_philippe-ruault_2017-02-23.jpgSecurities services is an increasingly technology-based business. Emerging innovations – including big data and blockchain – are rapidly and profoundly transforming our environment and client expectations, producing both enormous change and opportunities for banks to enhance our offerings. Keeping pace with this wave of digital innovation, and leading in its development and commercialisation wherever possible, is vital.

 

 

 

Digital focus

 

At BNP Paribas Securities Services, our digital innovation and transformation programme is a key priority and the focal point of our strategy for 2020 and beyond. To this end, in conjunction with BNP Paribas Corporate and Institutional Banking (CIB), we have pooled existing digital initiatives and skills into a single unit, the Innovation & Digital Lab.

Through the Lab, we aim to develop and test these emerging digital technologies by creating new solutions together with our clients and partners, with an emphasis on the four dimensions which we believe will shape the future of securities services:

 

Enhance the client experience

 

Clients want to do more through digital channels. At BNP Paribas Securities Services, we are enriching our web platform, NeoLink, to boost our clients’ autonomy and productivity by enabling greater self-servicing. This includes opening accounts, querying information and asking for expertise.

We are also devoting significant investment to improving data access, enabling clients to leverage the data they own within our legacy platforms so they can build on it to develop performance indicators and the like. And we are reviewing the user experience to make the customer web journey more user-friendly, with a mobile web capability.

Improving the customer experience also means knowing more about our clients, so we are investing in gathering information on clients’ activity on our web platform. With this, we can better evaluate their satisfaction with our service and identify areas where we can further support them.

 

Develop new business models

 

Our industry is changing and new business models are emerging. We support a diverse range of clients, spanning asset managers, asset owners, banks, brokers and corporates.

In partnership with our clients, we are investigating how we can launch platform-based solutions that will enable them to meet and collaborate with each other in their respective areas of interest. The new digital technologies will be a powerful enabler of such activities and will help us refine existing business models, create new product and service propositions that better support clients’ needs and allow us to enter new markets and/or develop our business.

Blockchain is a key development area and we are investigating how it could be used to transform the fund distribution model. We have also built a platform to electronically record and manage securities on blockchain. The first phase – supporting crowdfunded securities for start-ups and small and medium-sized companies, in partnership with fundraising specialist SmartAngels – is well underway. The next step is to handle and standardise the entire lifecycle of a mini-bond on the platform: the recording of a security, change of ownership, payment of coupons, etc. We also plan to develop new features, particularly cash management. The long-term goal, once regulations permit, is to apply the technology to listed markets by creating a multi-asset platform capable of managing complex assets.

 

Optimise processes

 

To enhance efficiencies, reduce costs and operational risks and improve responsiveness to clients, savvy market players are reviewing all their end-to-end processes to see where they can introduce more digital tools and automation.

We have embarked on that journey. Optical character recognition, for instance, enables us to transform information, such as a fax, into digitised data for faster access and use.

Automation technologies present a full spectrum of possibilities. At one end, low intelligence process automation technologies allow us to industrialise various routine and repetitive tasks, and give us much greater processing power through their ability to work 24/7. In the middle, medium intelligence tools such as Natural Language Processing and Natural Language Generation are used to analyse and generate text in natural language. At the other end, sophisticated machine-learning tools can be used to help answer basic client questions where the information can be difficult to find quickly. For example, what tax documentation is required if I am a South African wanting to invest in Taiwan? Machine-learning tools can scour our systems for the necessary data then feed it automatically to the client support team or the client directly through our web portal.

 

Assist employees

 

Employees are the key asset in any service industry. Wherever possible, we are trying to digitise the workplace to lighten employee workloads and increase efficiency by automating basic and repetitive tasks and deploying innovative systems and collaborative working tools. This will free staff to focus on solving complex problems, building solutions and client support. For example, two years ago we began a product-lifecycle management project to digitise all our product catalogue, pricing process, approval workflows for new product launches and so on. Meanwhile, through our Digital Working programme, BNP Paribas is working on an internal social media platform as a way to foster greater collaboration.

 

Client-centric transformation

 

Collaborate to compete

 

To be successful in digital transformation, we believe banks will need to collaborate more with different business and technology teams internally, and externally with other banks and fintechs.

Cooperating with fintechs – as we have done with SmartAngels – is mandatory. Fintechs tend to be agile and innovative and start with a clean technology and development slate, so finding the right partners can help banks expedite their digital transformation projects.

The reverse is also true. Even where fintechs are positioning themselves as competitors, such as in P2P lending, banks can still play a role as a trusted partner in the post-trade process to support the exchange of assets and cash and manage the security lifecycle.

Inter-bank collaboration is crucial, too, especially during a technology’s discovery phase. Blockchain is a prime example. Distributed databases could lead to a massive change in intermediaries’ business models, so it is vital banks are active in this space – as we are witnessing with the R3 consortium and Fundchain initiative in Luxembourg. Areas such as Know Your Customer (KYC) and settlement instructions, where banks have been struggling for a long time and gain no competitive advantage, are similarly ripe for collaboration.

It is imperative that banks leverage their internal expertise as much as possible as well. Within BNP Paribas CIB we have launched an Innovation Factory which has been fully deployed with Securities Services to help focus and accelerate ideas-generation and implementation. By engaging collaborators on targeted innovation challenges, we strive to incubate new ideas and transform them into concrete products and services in less than six months, while developing a community of intrapreneurs within the organisation.

 

Investing smart and wide

 

With such a huge number of rapidly evolving digital innovations and initiatives, inevitably there is a risk factor in choosing what to pursue. Some technologies will prove transformational. Others will come to nothing. The question is which ones? To maximise the potential competitive advantages on offer, a degree of trial and error will be inevitable – and essential.

We believe it is important to stay proactive, to monitor everything and invest widely. The risk of doing nothing is far greater.

 

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