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Magazine Issues » October 2020

Custody directory 2020

NumbersFunds Europe talks to senior executives about standardisation, the year ahead and the knock-on effects of lockdown. Plus, essential figures about some of Europe’s largest custodians.

 

 

 

 


Arnaud_ClaudonARNAUD CLAUDON, HEAD OF ASSET OWNERS AND ASSET MANAGERS CLIENT LINES, BNP PARIBAS SECURITIES SERVICES

Standardisation across the asset servicing industry is vital to back-office efficiencies. Has standardisation gone far enough to reduce operational friction and costs for asset managers and their clients? What sticking points remain, if any, and what needs to happen?

Asset managers are focused on integrating their front- to-back-office operating environments to enhance operational efficiency, reduce costs and improve servicing capabilities, at a time of margin compression and search for yield. At BNP Paribas Securities Services, we have adopted a software-agnostic approach, reinforcing our connectivity and integration with the industry’s leading portfolio management tools, to offer our clients the best operating model whatever their choice of front-office system. For instance, in order to allow clients using Aladdin to get the maximum value out of their platform, we have entered into a partnership with BlackRock Solutions to increase information symmetry as well as end-to-end efficiency in front-to-back processes. We believe that such efforts are all the more important as the asset management industry continues to suffer from a lack of market standards.

New developments like the upcoming introduction of ESG regulatory reporting obligations in Europe will compound the need for more norms and standards, notably in the field of non-financial market data.

Please tell us something about the stresses and strains of delivering asset services during 2020, due to the onset of the virus and lockdown.
In 2020, the Covid-19 crisis has tested the operational resilience of the global financial system.

As countries went into lockdown, our global operating model proved highly effective, enabling us to spread workloads across our network and reallocate processes based on the expertise of our teams in our various locations. Backed by a flexible IT infrastructure, this helped us manage high volumes at a time of high market volatility and unusual working conditions.

We were also able to quickly ramp up our existing remote working set-up to enable around 95% of our global workforce to work remotely and adapted key operational control procedures to remote working for additional security.

Asset safety and operational security are key differentiators for our clients, and we saw some of them consolidating their global and local custody business with us during the Covid-19 crisis, based on the merits of BNP Paribas Securities Services’ financial strength, in-depth control and end-to-end asset protection.

We are extremely proud of the achievements of our teams and the quality of the dialogue with our clients and partners during these unprecedented times.

What will custodians be focusing on most in the year ahead, both generally and with respect to asset management clients?
Looking across the industry, and within BNP Paribas, we can see huge progress being made on the provision of data services, for example leveraging artificial intelligence and APIs [application programming interfaces] to turn big data into actionable insight for our clients. How we embrace technology and use data are going to be crucial to the health and success of our industry going forward.

At BNP Paribas Securities Services, to expand our data service offering and achieve our goal of becoming the “data custodian”, we have created Investment Analytics and Data Services (IADS), a team focused on product design and development in the data management and analytics space.

As part of our integrated data strategy, we recently launched a number of key innovations, including a Natural Language Generation solution to help our global custody clients enhance monitoring and oversight of their operation, the automated processing of key asset servicing documentation using Natural Language Understanding, and a set of APIs in our fund administration and broker-dealer outsourcing businesses. We also announced a strategic stake in specialist fintech AssetMetrix, a leader in alternative classes analytics.

BNP Paribas Securities Services
9 rue du Débarcadère
93500, Pantin, France
www.securities.bnpparibas.com
+33 (0)1 42 98 10 00

Ultimate parent company origin: France
Global number of employees working in custody: 12,446
Global assets under custody: $11,343 billion
Global assets under custody EMEA: $10,181 billion

Senior executives in Europe: Patrick Colle (Paris), general manager; Alessandro Gioffreda (Milan), head of territory management; Arnaud Claudon (Paris), head of asset owners and asset managers client lines


Hani_KablawiHANI KABLAWI, HEAD OF INTERNATIONAL AND CHAIRMAN OF EMEA, BNY MELLON

Standardisation across the asset servicing industry is vital to back-office efficiencies. Has standardisation gone far enough to reduce operational friction and costs for asset managers and their clients? What sticking points remain, if any, and what needs to happen?

The asset servicing industry has evolved gradually in response to client demand for new services and capabilities. There have been good improvements along the way towards standardisation, digitisation and automation. The fact that, as an industry, we coped as well as we did at the start of the Covid-19 pandemic lockdown – a time of significant spikes in activity – is testament to that. This would have been far harder to achieve even a few years ago. But these steady changes and improvements need to accelerate.

Today’s challenges are of another order of magnitude and we are driving a more rapid and urgent transformation. We are working closely with our clients to reduce manual workflows to enable STP and gain the benefits of digitalisation. These benefits go much further than back-office efficiency; the consumability and flexibility of technology enhances the client experience and enables us to bring valuable data and insight back to clients via APIs, portals and third-party platforms. They also allow us to accelerate the delivery of our own and third-party solutions to clients.

Please tell us something about the stresses and strains of delivering asset services during 2020, due to the onset of the virus and lockdown.
The pandemic showed the asset servicing industry to be well prepared, flexible and resourceful when dealing with previously unenvisaged scenarios. Many market participants achieved business as usual relatively quickly, complying with regulatory responsibilities, maintaining their operating and reporting environment and their relationships with clients.

At BNY Mellon, we had some 95% of staff working from home within three weeks; many clients achieved similar levels of homeworking.

However, the pandemic did highlight some sectors and processes where automation and digitisation is less advanced. For example, reclaiming withholding tax on overseas investments was particularly difficult because of the need for physical documents and wet signatures.

The experience of the pandemic lockdown may help to accelerate progress across the industry in these areas and others, but it takes a collaborative, coordinated effort to get everyone pulling in the same direction.

What will custodians be focusing on most in the year ahead, both generally and with respect to asset management clients?
Client expectations are rising and our clients expect us to lead them to a more digital client experience. At BNY Mellon, we’ve been shifting our emphasis from operations-intensive products and services to a client solution orientation enabled by digital, data and analytics. Fundamentally, our work remains the same, but the way in which we deliver it is much more in keeping with the digital client experience: more automation, more straight-through processing, lower risk and data enabled – bringing data and insights back to clients: faster, more granular and where they want to consume it.

BNY Mellon
One Canada Square, Canary Wharf
London, E14 5AL
bnymellon.com
+44 20 7163 5566

Ultimate parent company origin: US
Global number of employees working in custody: 4,000
Global assets under custody: $37,300 billion
Global assets under custody EMEA: n/d

Senior executives in Europe: Hani Kablawi (London), chairman of international; Illeana Sodani (London), head of international sales; Leonique Van Houwelingen (Brussels), CEO of BNY Mellon European Bank