Magicians At Work

AI is the magic ingredient

Digital transformation starts with digitisation, which is the conversion of information from a physical format into a digital one. Digitalisation is the use of digitisation to improve business processes, change business models and seek value-producing opportunities. Hence, digitisation is necessary, but not sufficient, for digitalisation.

Widespread impactful and multiple digitalisation results in digital transformation; the process of moving to a digital business. With digital transformation, data arrives in ever-increasing volumes from more sources with greater velocity and variety. Cloud computing is needed to deal with such ‘big data’ efficiently. It allows the delivery of services (e.g. data storage, servers, databases, networking, software) through the internet.

Artificial intelligence (AI) turns ‘big data’ into actionable information. AI involves computer systems performing tasks previously requiring human intelligence (e.g. visual perception, speech recognition, decision-making, translation between languages). Only with AI can such quantities of data be managed (e.g. applying risk management, regulatory or compliance requirements).

AI is the ‘magic ingredient’ allowing digitalisation, big data and cloud computing to transform securities processing. Without AI we would be non-swimmers drowning in a sea of data!

Post-trade is being transformed

Post-trade processing converts mountains of financial data to meaningful and actionable knowledge. That is what we do in securities services. There cannot be many industries that were so perfectly suited for digital transformation.

With AI and APIs clients are moving to self-servicing with speedier access to real-time data across post-trade, from KYC and on-boarding to settlement and asset-servicing.

Big changes are happening across post-trade. Often they are intermingled or co-dependent. However, they can be put into four categories:

• Data improvement: digital transformation requires accessible high quality data with imbedded quality controls.

• Digitisation: there is much information to digitise (e.g. annual reports, contracts, emails, faxes, fee schedules, fiscal forms, SLAs). The list is endless. Once digitised they can be analysed and actioned with AI.

• Process improvement: core to digitalisation is improving processes with streamlined, faster and better-connected workflow management.

• Insight: analysing and understanding data allows for better business management. This raises awareness of risks, encourages control and suggests appropriate products for clients.

Within BNP Paribas Securities Services this digital transformation is well underway and is evident in many of our processes (e.g. tax documentation, implementations, queries and instruction management). The goals of our investment and long-term plans are threefold: continue to improve our client experience, increase efficiency and reduce risk.

Even magic needs direction

To achieve this digital transformation, post-trade providers are investing in new systems, partnering with fintechs and expanding in-house expertise. Some are outsourcing technology and operations. These are important strategic decisions. We used to say that post-trade was a people business. That was years ago. With digital transformation post-trade is a technology business.

However, people are vital. Even magical AI needs direction. Digital transformation can only happen with business