The Next Generation Network Manager

In 2013 I wrote an article for the “Daily News at Sibos”, on the resurgence of the Network Manager. At the time regulation, including the Alternative Investment Manager Directive (AIFMD) and others, was the biggest change affecting the industry. As a direct result of this regulatory tsunami, the Network Management function was significantly reinforced across all institutions. I also held the view that the industry had realigned the three traditional key criteria for selecting a sub-custodian; in order of priority to - Risk, Service and Price.

Consumer behaviour, expectations and demands, as well as the need to foster innovation and competition, have, as a direct response of new technology, evolved and driven the broader financial regulatory landscape. These developments combined with increasing risks have led to a more complex operating environment, which banks have had to adapt to in a limited timeframe. As commercial relationships have become more complex across the entire value chain, digital transformation has addressed the need for new tools to monitor and enhance the client experience. At SGSS we have embarked on several initiatives, including Artificial Intelligence (AI) with natural language generation and new models and platforms to drive consistency across a full spectrum of activities from RPA to a fully integrated front-to-back solution. It can now be argued that the “Next Generation Network Manager” will include a fourth key criterion when considering its sub-custodian selection, in the form of Digitalisation.

and the introduction of new trading venues has made previously untradeable assets tradeable. The Australian Stock Exchange intends to use blockchain technology to replace its existing core infrastructure. The Swiss Stock Exchange will implement a fully integrated trading, settlement and custody infrastructure for digital assets and in October 2018 ID2S obtained initial authorisation to create an EU Central Securities Depository powered by blockchain technology. These are just a few examples of how market infrastructures are changing the landscape in which Network Managers operate. As part of their evolving role, Network Managers will need to adapt to new ways of working such as settlement via smart contracts and changes to the management of lifecycle events, such as corporate actions and income.

Service Level Agreements (SLAs) will move away from analysis of historical data into real time management tools. There will be a shift as the data supplied by the agent bank network evolves from a monitoring matrix to truly focus upon business performance and outcomes. It will provide the ability to quickly and easily update and adapt what are today largely fixed SLAs and KPIs based upon the continuously changing needs of the business. Negotiating and then filing an SLA until there is an issue or annual service review will become a thing of the past.

Custodian banks have provided online tools for clients to access data pertaining to their accounts for a number of years. This has usually been limited to basic areas such as settlement updates, corporate events and portfolio data.

manual, intensive process with a far greater reliability and accuracy of the underlying documents. The use of digitalisation in the KYC and documentation process is another component and differentiator in the agent bank selection process.

One of the most immediate and obvious areas where digital technology can provide efficiency is in terms of contract management. AI provides the ability to extract insight from large volumes of data, enabling Network Managers to quickly identify and locate key terms from contracts across its entire agent bank network. In this example, it could facilitate the ability to react and assess the impact of a specific disturbance or market event, which may have already affected the network or assess the risk of a potential or anticipated event. Alternatively, it could simply provide the ability to compare negotiated terms, with an existing standard template, to provide a view of the differing legal position with agent banks on a specific subject. Gaining such insight has historically been a timeconsuming, resource intense task.

Technological advancement is now enabling custodians to use data as a service and standalone product. At Societe Generale Securities Services (SGSS) we store and aggregate information and data from transfer agents to provide intelligent, consolidated reporting and an analytics solution for asset managers to optimise their distribution strategy. This is packaged and promoted as a standalone offering called D-View.

We are in an environment where market infrastructures and major financial institutions continue to dedicate large budgets and resources to new and emerging technologies. Some technologies are still maturing and the policy framework is not yet complete, so we have to promote a “test and learn” approach and engage with new partners in the form of fintechs, to build new business and operating models. The “Next Generation Network Manager”, working in collaboration with the agent bank community, will be given the opportunity to leverage advancing technology to work smarter and to more efficiently manage the agent bank network, enhancing the overall client experience. Digitalisation as a fourth pillar is unquestionable and is part of the new world order. Consequently, the evolving role and next generation of Network Management will continue to be heavily shaped and influenced by it.

Andrew Duffin, Managing Director Head of Sales and Relationship Management, UK Societe Generale Securities Services

The role digitalisation will play for Network Managers is multifaceted. Market infrastructures have started to adopt blockchain and distributed ledger-based technology

As digital technology continues to develop it will positively affect the way Network Managers monitor service levels. Key Performance Indictors (KPIs) and

An AI powered KYC and documentation engine with the automated uploading of records such as tax documentation, account opening forms, proof of identity and power of attorneys, has the potential to provide a fast, accurate and seamless customer experience. Where regulation permits, it could facilitate data feeds from multiple sources and centralize the documentation process into a single utility within a multimarket agent bank. Ultimately, this provides an automated, less