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Paving the way for a new era of innovation
Paving the way for a new era of innovation

Paving the way for a new era of innovation


Paud O’Keeffe

Paud O’Keeffe

Head of Client Digital Experience

BNP Paribas Securities Services

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The world is changing and with it so must banks if they are to retain market share and dominance

Political and regulatory fluctuations, in addition to technological advancements are forcing providers to rethink their approach to client servicing. Beta testing of innovative technologies is also being marshalled in by alterations in client demographics with a youthful millennial workforce increasingly taking the reins in decision-making roles. Millennials are extremely literate technologically, and this is compelling providers to adapt by delivering services that are in real time, digitised and self-explanatory. BNP Paribas Securities Services recognised that these trends would be a harbinger of widespread industry change, which is why the bank established its pioneering digital transformation teams in 2016.

Co-creation and what it means

Product innovation and development is evolving and digital transformation teams are taking the lead. Historically, a number of service providers have been guilty of assuming a bunker mentality towards product design and creation, which occasionally meant clients were offered services that were not entirely synchronised with their requirements or arguably even relevant to what they wanted to achieve. BNP Paribas Securities Services is forging ahead with its co-creation initiative, a scheme whereby clients are actively encouraged and invited to participate alongside the bank’s digital transformation divisions in the development of new product suites from inception to delivery.

Such extensive collaboration enables BNP Paribas Securities Services to learn from its clients about what their core business issues are, allowing the bank to create solutions which are more tailored to customer needs. Co-creation occurs in stages, beginning with the research component whereby BNP Paribas Securities Services will engage with a diverse group of clients in workshops and brainstorming sessions to identify pain-points frustrating their operations. Once these problems are detected, BNP Paribas Securities Services and its clients will hypothesise and discuss ways and means by which they can be resolved.

Collective agreement must be reached before co-creation can progress from the ideas stage to the exploratory and prototype phase. Equally, providers must be unafraid of arbitrarily withdrawing a concept if it does not meet the necessary pre-requisites, although it is critical clients be fully informed as to why projects are abrogated. From a bank point of view, all ideas must make commercial sense, and for that to be possible they need to possess broad client appeal. In other words, a very specific problem facing an individual or small minority of customers would not generally form the basis of a potential prototype.

It is also essential that prospective developments are feasible, from a technological and regulatory perspective. When these qualifying conditions are met and initial stages completed, solutions will be piloted among a test group of clients to ensure that they work and solve the original problem in question. Once the product’s applicability is validated, it will be scaled up and rolled out to a wider audience. To date, co-creation and the end solutions that have been delivered off the back of it have received a rapturous reception from clients.

BNP Paribas’ investor services application for alternative clients is one such example and it is currently in the pilot phase of development. The application, which is accessible across PC, tablet and mobile, provides buy-side clients with key information, data and insights across their alternative investments in real time. Co-created from inception with clients, leveraging the design thinking and lean start-up processes of the bank’s digital transformation team, the solution delivers a modern, secure, digital ecosystem that provides clients with the information they need, in the way they want to consume it.

In addition to client co-creation initiatives, BNP Paribas Securities Services also engages and partners with fintech and reg-tech firms to enhance customer experiences. A recent high-profile example of this has been the bank’s work with Fortia Financial Solutions, a software company which uses artificial intelligence (AI), machine learning and business process monitoring to help funds meet their rising compliance and data management obligations. Through frequent conversations with clients, BNP Paribas Securities Services realised a number of firms were struggling to effectively monitor their fund compliance requirements in line with local and international regulations.

BNP Paribas Securities Services was introduced to Fortia by L’Atelier BNP Paribas during its Fintech & Corporate Accelerator programme in 2016. Synergies were quickly spotted and the bank acquired an equity stake in Fortia, which had developed an investment compliance platform that helps asset managers and asset owners ensure they have the correct controls to systematically and efficiently monitor fund compliance with regulations globally.

Not only will BNP Paribas’ equity stake allow Fortia to expand and grow its offering, but the technology will be deployed in the bank’s depositary business, helping fund managers enhance controls and operational efficiency and get access to advanced data and analytics and scenario simulation applications. This is only one initiative, and the bank currently has a number of co-creation and partnership projects underway, all of which will help augment customer experiences moving forward by introducing enterprise-wide efficiencies for the end user. 

Facilitating a new way of thinking

If co-creation exercises and technological innovations at banks are to succeed, firms need to implement drastic cultural changes. After several years of scorning fintechs as potential usurpers, banks are now cooperating with such providers mainly because they see them as complementary to their ultimate goals. The knowledge, expertise, balance sheet strength and customer base of large banks twinned with the agility and speed of fintechs have proven to be highly compatible, and this collaboration is likely to continue, in what will bring further benefits for clients.

Nonetheless, reforms do need to be enacted at banks if they are to actively support innovation. Engrained inertia is a plight that affects nearly every major corporate incumbent, but so is a fear of failure, a particularly sensitive issue for banks given they have spent the last decade de-risking their operations and activities. Innovation at banks is a process that needs to be undertaken in a carefully risk managed environment, but C level staff must also accept that some ideas may end up in failure or not even leave the drawing board to begin with.

Acceptance of occasional failure is a mentality that has been imbued at big tech companies like Google, Apple, Facebook and Amazon (GAFA), allowing them to make major advancements without fear of recriminations when things go awry. While Google Glass, for example, did not enjoy critical or commercial success, the company has launched a sufficiently large number of products which have captured the public’s imagination, helping to turn it into one of the world’s biggest corporates by market capitalisation. Banks need to adopt this mantra moving forward if they are to stave off disruption and retain customers.

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