Taking centre stage
18 April 2018
Jerry Norton of CGI discusses some of the technology trends in the asset servicing spotlight
Image: Shutterstock
Based on CGI’s Client Global Insight 2017, we take a look at some of the trends that will take centre stage this year. In corporate and transaction banking we are seeing an overall acceleration in digital transformation programmes, integrated physical and financial supply chains, real-time payment processing and sophisticated protection as banks respond to customer demands and increasing competition to reduce costs and enhance revenue.
Continuous re-organisation and change to drive digital agendas: Corporate and transaction banks are pushing forwards by embracing new business models, which will secure their place in a digitally connected economy. As enterprise-wide digital strategies are implemented we expect banking executives to adapt, change and evolve the organisation of their business. More than half (63 percent) of the executives interviewed are leveraging a centralised team to drive the execution of their digital transformation plans, and a majority (36 percent) is leveraging external partners. Because the business model change is enterprise wide, both the CIO office and lines of business are jointly engaged in the change, and more than half have an innovation team involved. This year, we will see efforts to attract new digital talent and leadership into the organisation, and also an increasing number of banks taking more radical approaches to organise along agile principles.
Enabling the global adoption of real-time: One of the biggest examples of the industry-wide change taking place is the global adoption of real time or instant payments—albeit at different paces by country. In some regions, this change is driven by regulatory push, while in others by the need for greater economic competitiveness and productivity. However, for our clients this year we will see a renewed focus on transforming the IT ecosystem to operate in real time and for cost reduction through technology simplification and the adoption of new implementation and delivery models such as agile development, DevOps and cloud computing.
Open banking and emerging technologies comes to the fore: New technologies, especially open application programming interface (APIs) and blockchain, are changing how the industry works. Open APIs unbundle the banking value chain and enable banks and non-banks to create new and extend existing services, which will accelerate already intense service competition. Blockchain, or distributed ledger technology (DLT) is being piloted to connect financial and physical supply chains and remove historical paper-based inefficiencies. Alongside these is the rise of Intelligent automation and artificial intelligence. Each of these technology areas is a potential game changer in its own-right, but together they promise to bring deep transformation to the industry.
These ‘hot topics’ have been making waves for a while, but we expect to see these technologies move into production environments this year, with the possible exception of artificial intelligence, which still needs to mature and be paired with more robust and accessible data before its full impact is felt. The corporate and transaction bank executives we interviewed are primed to execute enterprise transformation at pace and the adoption of these new technologies.
Corporate servicing becomes omnichannel: This year, we expect to see a big emphasis in customer centricity. We are witnessing the ‘next step’ in corporate servicing as more corporates demand support across all channels. While progress has been made in the digital servicing space, corporates do not want a ‘digital-only’ servicing model. Banks are being asked to join the physical with the digital, and many are taking the opportunity to drive market differentiation through more customer-centric business models and innovative value-add services through the use of intelligent automation and data analytics.
Innovation extends to protection: While money laundering regulation, anti-fraud measures and security continue to be top priorities for banks as threats continue to escalate, banking executives are looking to new technologies to support them in these areas. This year, we expect to see machine learning being used more readily to help drive efficiencies and improve control in both risk and fraud procedures.
Capital Market firms have always been more mature in their use of data and technology than their retail and corporate banking cousins, but the results shown in CGI’s Client Global Insight report suggest that the pace of change is accelerating. What we are seeing is an overarching imperative to meet customer demand and reshape business models with new technology as the key enabler. Here are the top five technology trends to watch in capital markets last year:
Data: CGI’s clients see data as not only the oil of their business, but also as the principal asset of it. Data quality, consistency, reporting and control are seen as key for the former but pursuing predictive analytics to drive new products and services or tailor existing ones to specific customers or customer groups underpin the latter. With advanced analytics, for example, data is no longer considered just an input or output, but the heart of the business—capable of generating rich insight and new revenue streams. Clients are increasing investment in the tools and technologies that delivery these outcomes, they are appointing chief data officers and commissioning projects to create data utilities within their organisations to be the golden source of reference and counterparty data.
The velocity of digital transformation is increasing: Digital awareness and action was much higher in 2017 than 2016 and we expect this to continue throughout this year. The focus will be on driving automated real-time and scalable business models through digital customer interaction at the front end and transaction platforms at the back. Enterprise-wide change ranks as the number one business priority, as capital market executives seek to achieve the three goals of cost reduction, improved regulatory compliance and improved agility to maintain and increase profitability.
However, many are still without an enterprise-wide digital strategy, this year we predict that more emphasis will be given to the creation of these strategies while the forerunners will be actively implementing.
Decision-making has also become more technology focused, with a majority of organisations embedding digital into their lines of business, and jointly empowering their IT departments and lines of business to build and execute an enterprise-wide transformation roadmap. Overall, there is an urgency to digitalise to transform the organisation, improve operational performance, better serve customers and drive new business opportunities. But cross line of business coordination remains a challenge—many of these changes need common applications and shared operations, which are difficult to deliver in a fast changing and competitive landscape.
The new role of robotics: Capital market firms were one of the early adopters of aspects of the current robotic revolution; the sell side, for example, has used algorithms in trading since the late 1990s. However, this form of automation has been very niche and predominately front-office oriented. Today, the capital market executives we met with are implementing robotics across the wider value chain.
Although most are in the first stage of implementation, automating routine tasks through robotics process automation (RPA) software, machine learning, intelligent automation and (specific) artificial intelligence to (say) recognise trading opportunities for the firms and customers alike offer exciting opportunities.
Subsequent stages are still in gestation, with a small percentage of respondents pursuing, investigating and looking at proof-of-concepts of these emerging techniques.
Digital service: When it comes to digital transformation there is a pointed focus on service. This year, we will see capital market players putting increased efforts into building their digital workforce and implementing more customer self-service options. Alternative customer channels, such as voice input and chatbot support are under investigation.
With the changing times, there is a need to evolve operating models so firms stay relevant to both their customers and employee. Real-time connection, highlycustomised front ends, voice and automated service will be part of this.
Urgency to protect: All of this requires protection for the customer and the firm. CGI’s
Client Global Insight highlights that investment in cybersecurity has significantly increased from 2016. Throughout this year, it will take top-spot as a major business imperative. Capital market respondents realise that cybersecurity spend is an unavoidable cost of doing business.
There is an opportunity, however, for cybersecurity spend to shift from a cost burden to a competitive differentiator as firms cite the need to offer safety and trust to their customers.
What hasn’t changed for capital market respondents, however, is the burden of complying with existing regulations, along with the understanding that this burden and its associated costs will continue to increase over time.
Continuous re-organisation and change to drive digital agendas: Corporate and transaction banks are pushing forwards by embracing new business models, which will secure their place in a digitally connected economy. As enterprise-wide digital strategies are implemented we expect banking executives to adapt, change and evolve the organisation of their business. More than half (63 percent) of the executives interviewed are leveraging a centralised team to drive the execution of their digital transformation plans, and a majority (36 percent) is leveraging external partners. Because the business model change is enterprise wide, both the CIO office and lines of business are jointly engaged in the change, and more than half have an innovation team involved. This year, we will see efforts to attract new digital talent and leadership into the organisation, and also an increasing number of banks taking more radical approaches to organise along agile principles.
Enabling the global adoption of real-time: One of the biggest examples of the industry-wide change taking place is the global adoption of real time or instant payments—albeit at different paces by country. In some regions, this change is driven by regulatory push, while in others by the need for greater economic competitiveness and productivity. However, for our clients this year we will see a renewed focus on transforming the IT ecosystem to operate in real time and for cost reduction through technology simplification and the adoption of new implementation and delivery models such as agile development, DevOps and cloud computing.
Open banking and emerging technologies comes to the fore: New technologies, especially open application programming interface (APIs) and blockchain, are changing how the industry works. Open APIs unbundle the banking value chain and enable banks and non-banks to create new and extend existing services, which will accelerate already intense service competition. Blockchain, or distributed ledger technology (DLT) is being piloted to connect financial and physical supply chains and remove historical paper-based inefficiencies. Alongside these is the rise of Intelligent automation and artificial intelligence. Each of these technology areas is a potential game changer in its own-right, but together they promise to bring deep transformation to the industry.
These ‘hot topics’ have been making waves for a while, but we expect to see these technologies move into production environments this year, with the possible exception of artificial intelligence, which still needs to mature and be paired with more robust and accessible data before its full impact is felt. The corporate and transaction bank executives we interviewed are primed to execute enterprise transformation at pace and the adoption of these new technologies.
Corporate servicing becomes omnichannel: This year, we expect to see a big emphasis in customer centricity. We are witnessing the ‘next step’ in corporate servicing as more corporates demand support across all channels. While progress has been made in the digital servicing space, corporates do not want a ‘digital-only’ servicing model. Banks are being asked to join the physical with the digital, and many are taking the opportunity to drive market differentiation through more customer-centric business models and innovative value-add services through the use of intelligent automation and data analytics.
Innovation extends to protection: While money laundering regulation, anti-fraud measures and security continue to be top priorities for banks as threats continue to escalate, banking executives are looking to new technologies to support them in these areas. This year, we expect to see machine learning being used more readily to help drive efficiencies and improve control in both risk and fraud procedures.
Capital Market firms have always been more mature in their use of data and technology than their retail and corporate banking cousins, but the results shown in CGI’s Client Global Insight report suggest that the pace of change is accelerating. What we are seeing is an overarching imperative to meet customer demand and reshape business models with new technology as the key enabler. Here are the top five technology trends to watch in capital markets last year:
Data: CGI’s clients see data as not only the oil of their business, but also as the principal asset of it. Data quality, consistency, reporting and control are seen as key for the former but pursuing predictive analytics to drive new products and services or tailor existing ones to specific customers or customer groups underpin the latter. With advanced analytics, for example, data is no longer considered just an input or output, but the heart of the business—capable of generating rich insight and new revenue streams. Clients are increasing investment in the tools and technologies that delivery these outcomes, they are appointing chief data officers and commissioning projects to create data utilities within their organisations to be the golden source of reference and counterparty data.
The velocity of digital transformation is increasing: Digital awareness and action was much higher in 2017 than 2016 and we expect this to continue throughout this year. The focus will be on driving automated real-time and scalable business models through digital customer interaction at the front end and transaction platforms at the back. Enterprise-wide change ranks as the number one business priority, as capital market executives seek to achieve the three goals of cost reduction, improved regulatory compliance and improved agility to maintain and increase profitability.
However, many are still without an enterprise-wide digital strategy, this year we predict that more emphasis will be given to the creation of these strategies while the forerunners will be actively implementing.
Decision-making has also become more technology focused, with a majority of organisations embedding digital into their lines of business, and jointly empowering their IT departments and lines of business to build and execute an enterprise-wide transformation roadmap. Overall, there is an urgency to digitalise to transform the organisation, improve operational performance, better serve customers and drive new business opportunities. But cross line of business coordination remains a challenge—many of these changes need common applications and shared operations, which are difficult to deliver in a fast changing and competitive landscape.
The new role of robotics: Capital market firms were one of the early adopters of aspects of the current robotic revolution; the sell side, for example, has used algorithms in trading since the late 1990s. However, this form of automation has been very niche and predominately front-office oriented. Today, the capital market executives we met with are implementing robotics across the wider value chain.
Although most are in the first stage of implementation, automating routine tasks through robotics process automation (RPA) software, machine learning, intelligent automation and (specific) artificial intelligence to (say) recognise trading opportunities for the firms and customers alike offer exciting opportunities.
Subsequent stages are still in gestation, with a small percentage of respondents pursuing, investigating and looking at proof-of-concepts of these emerging techniques.
Digital service: When it comes to digital transformation there is a pointed focus on service. This year, we will see capital market players putting increased efforts into building their digital workforce and implementing more customer self-service options. Alternative customer channels, such as voice input and chatbot support are under investigation.
With the changing times, there is a need to evolve operating models so firms stay relevant to both their customers and employee. Real-time connection, highlycustomised front ends, voice and automated service will be part of this.
Urgency to protect: All of this requires protection for the customer and the firm. CGI’s
Client Global Insight highlights that investment in cybersecurity has significantly increased from 2016. Throughout this year, it will take top-spot as a major business imperative. Capital market respondents realise that cybersecurity spend is an unavoidable cost of doing business.
There is an opportunity, however, for cybersecurity spend to shift from a cost burden to a competitive differentiator as firms cite the need to offer safety and trust to their customers.
What hasn’t changed for capital market respondents, however, is the burden of complying with existing regulations, along with the understanding that this burden and its associated costs will continue to increase over time.
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