When it comes to IT innovation, the securities services industry is currently spoiled for choice. How to integrate it into mainstream operations is less obvious. Global Custodian spoke with Arnaud Misset, chief digital officer at CACEIS, about the challenges.
Global Custodian: If you were to mark the industry out of 10 for progress made since the drive to automation and STP started, what would you give it?
Arnaud Misset: I think I would give it an eight. We often say that we don’t do enough, but if you look back a decade, much has happened in terms of automation, in terms of self-service for the client, in terms of platform development and in terms of data. 10 years ago, we were just beginning to talk about big data and data utilisation. Now, it seems to be almost mainstream.
I think we’ve made huge progress in fact. Ten years ago was when I joined CACEIS. If I think about what CACEIS was able to do then, it is really far from what we provide our client with now.
How far is the pace of progress down to client preference rather than availability of technology?
AM: That is a factor. We have clients who still use fax. In some areas, we’ve moved faster and better than other industries. And in some areas, we are lagging behind.
In areas where the industry is lagging, do you think there’s an industry consensus that those areas are not handled as well as they could be or does it vary firm by firm?
AM: I would say communication channels in the industry are generally recognised as not great at the moment, but there are many solutions on the market. Some of us are using those solutions, but they’re not widely spread in the industry. We were talking about fax access still existing, and email is still the main means of information exchange. We all know it’s not good to rely on email. We receive hundreds of emails a day and there’s a risk of losing information and at the same time having to wade through other information that you don’t need in your day-to-day work.
And there are alternative solutions, like private chat rooms and, for example, the Symphony system. I really believe that technology is not an issue anymore. You can find solutions for every problem. And you can even find solutions that are still looking for a problem.
We started an initiative at CACEIS, which we call the Connect Store, which connects our clients with best-in-class third-party services. We realised that as an asset servicer, we cannot be good in every area in terms of IT. You have a huge number of FinTechs providing really good solutions, but to provide the solution, they have to rely on the data managed or created by the asset servicer.
We don’t have to compete with those FinTechs. We can integrate them into our website and tell our clients they can benefit from those additional services. We have their portfolio composition file. If they want, it can be directly integrated with the service that a FinTech is rendering through our web portal.
It’s a win-win situation. The FinTechs are happy because they have access to a potentially huge number of prospects directly integrated with them and the clients can have one-stop shop access. We’ve changed our mind about that. A few years ago, we would have preferred the FinTech to render the services in white label mode or to be seen to be doing everything on our own. Now, that’s not an issue. Frankly speaking, it’s really helpful for us as well, because the client can find everything at CACEIS and we retain the relationship with the client. That’s really important.
When you merge with another firm with a different set of technologies, for example, Santander Securities Services, is that a reason to accelerate new IT implementations or slow them down?
AM: I think it works in both directions. If you’re talking about the big core platforms, it takes time and it could be difficult to merge. But in the field of new digital services, it helps to speed up the process. Why? Because we have something they don’t, they have something we don’t. When we discuss this with each other, it helps build the first bridges between the two companies.
Let me give you two simple examples, one from Santander to CACEIS and one from CACEIS to Santander. At CACEIS, we have a platform called TEEPI Data Hub that is a regulatory file exchange designed for Solvency 2, PRIPs and other regulatory reporting requirements. It’s valid for every European country. Santander and its clients can directly benefit from this platform, which is more or less standalone from any other part of the CACEIS IT system. They can have it right now.
In the other direction, we were talking earlier about Symphony. The system has already been implemented at Santander, but not at CACEIS, so we can directly benefit from their experience of what works and what doesn’t and can easily and quickly move to share the system.
If we look at what generally comes under the umbrella of new technologies, which of them do you think have the biggest short-term benefit and the biggest medium-term benefit and which are over hyped?
AM: Well, AI is already there. We’ve already got the benefit from AI, particularly as related to natural language processing. For instance, the automated reading of a firm’s prospectus works and it works pretty well. And it’s really helpful to feed the master data.
Robotic process automation is also really helpful for simple tasks. It doesn’t necessarily provide added value, but there are some tasks that everyone is really happy are being done by a robot rather than a human being.
Now when it comes to blockchain, we’ve been talking about it for six or seven years and how it will change the world. It probably is changing the world, but slowly. We do see more and more clients asking for digital asset services. From a medium-term perspective, it will certainly change the way we act.
One thing that’s not overhyped, but which, like blockchain, we’ve been talking about for ages is data. Data is the new oil, there is a real demand for it. Everybody wants to play with data, wants to manage data, but nobody wants to pay for it. The problem is, it’s not your data, it’s already the data of your clients. The benefits are proven, but it’s really difficult to monetise.
Apart from the fact that clients don’t want to pay for it, to extend your metaphor about oil, there’s a lot of crude oil, but not that much refined for specific types of engines.
You’re right. Another problem is missing data. If you have 99% of the requested data, but 1% is missing, it reduces the value. It’s a challenge. You have to be able to manage your crude oil, to refine it, but also to be able to feed in additives coming from external sources. And keeping in mind that you are responsible for the quality of the whole thing, it’s a tough game.
