Network Management In 2025

We are living in an everchanging world, the impact of which is being felt by businesses on a number of different levels. Network management will not be the exception, and will likely see its remit evolve dramatically over the next few years. The traditional roles and duties of network managers (i.e. risk management, regulatory and financial crime compliance, cost management, capability assessments, delivery of market information, etc.) will not disappear altogether, but could actually assume a far greater significance.

Internal coordinators

Increasingly, network management will likely be the internal function assigned with coordinating all of the different activities between the various business streams (legal, financial and regulatory compliance, risk, credit, operations, IT/Cyber) across banks who are utilising external/internal agents. It is critical that only one party (the network manager) has full visibility and oversight of these agents. Such centralisation will help mitigate the risk of separate stakeholders within banks establishing their own bespoke network solutions, which could result in a superfluity of external agents, leading to overlaps and added costs.

Data integrators and knowledge providers

Simultaneously, network teams should also have an integral role in improving data management and quality at banks. Right now, the sheer volume of fragmented data makes it difficult for banks to process information. Owing to their unique position within their organisations, network teams could assume charge of data aggregation and integration, thereby becoming a holistic source of knowledge for the entire business and an increasingly important participant in their banks’ strategic development and implementation processes.

Management of partnerships

Technological disruption and rapidly changing market practices will create new and unique risks for network managers. As markets become increasingly interconnected and complex, the deeply engrained relationships which network managers have forged with external providers will become even more vital. It is crucial that network managers have a full front to back view of their agents if these risks are to be managed safely and effectively.

Elsewhere, some network teams may look to consolidate their providers to obtain cost-savings and a more globally consistent service. This could be done by appointing sub-custodians on a regional basis as opposed to using them simply for individual markets. However, specialist providers will likely be retained in some instances alongside traditional agent banks. It is clear we are seeing a transition in network management teams as clients increasingly prioritise value-drivers over cost-drivers when selecting their service providers.

Driving a new, dynamic due diligence model

The existing network management due diligence model is fragmented and inefficient for all individuals involved. In addition, network manager due diligences are usually conducted in cycles (annual, bi-annual, three-yearly), meaning they do not have a real-time view of operational risk at their service providers. Consequentially, network managers are being encouraged to adopt a “continuous monitoring model” of due diligence, enabling them to obtain a real-time oversight of the operational risks across their agents.

To do this, network teams should develop data and analytical tools to produce internal control reports and manage exception handling. These will need to be enabled by APIs providing direct connectivity between network managers and agents. Likewise, distributed ledger technology (DLT) could also be deployed allowing agents to report information in realtime. Network managers may even look to leverage AI-enabled predictive analytics to help them identify trends, allowing them to pre-empt problems at their agents. Such technologies will be pivotal if the due diligence process is to shift away from the current static model to something more dynamic.

Changes in market infrastructures will drive new business models

Market infrastructures are likely to undergo a massive business model transformation as a result of new technologies. They are widely expected to engineer systems whereby custodians (or even clients) become nodes in a DLT, allowing end customers to become direct market participants. It is also probable that new tri-party models will need to be developed in order to create an integrated solution between the client, the CSD and their custodian banks. Network management teams will likely be entrusted with ensuring and validating that assets are safe-kept properly in this multiparty business structure.

The evolution of cryptocurrencies

There are interesting developments happening in the cash world too, most notably the emergence of digital currencies. It is still early days but such developments could change or even completely remove the need for external settlements. Instead, these could become book transfers in a central ledger. The concept of ‘one version of the truth’ should make the reconciliation process much easier as well. These developments will likely change the way banks provide services to clients. Just like transformations elsewhere, network managers will have to evaluate their role in this new world of cash.

Data as a new asset

The industry is also likely to see an increase in organisations transforming physical documents into digital formats. This pivot towards digitalisation should not be misconstrued with dematerialisation though. Instead, providers envisage an operating environment whereby physical documents (e.g. private placements) are scanned into a digital format giving clients a joinedup view of their entire portfolios through a digital vault. Such tools will help network managers carry out their duties more effectively.

Network managers in the centre

Technological innovation and evolving risk dynamics will have a direct effect on the traditional activities of network managers. In response, the industry needs to acquire a deeper understanding about new technologies. Moreover, network managers will find themselves thrust into the centre, acting as coordinators and data aggregators across multiple business streams within banking groups. As such, network managers are expected to play a more critical role when helping banks achieve their strategic objectives.

John Van Verre Global Head of Network Management, HSBC