treasury & capital markets overview case study:


IBS Journal Supplement September 2015


ity model as a whole makes most sense for settlement. ‘There is not a lot of differ- entiation other than in not doing it right, everything has to settle when it’s meant to settle.’ Know Your Customer (KYC), where a number of utilities have sprung up, and reference data are other areas that he cites as well suited to this way of doing things. That ‘back to basics’ extends to trying


to make much better use of data. Collateral management is a big topic, of course, says Campbell. ‘Across the board it is driving a lot of the need for better data on positions, on what should be where, and we see this in things like margin calculations becom- ing much more important.’ This means bet- ter analytics and better presentation of the information, so that it can be used for day- to-day decision-making. ‘Digitalisation’ is also a focus, he adds, to try to gain better interaction with customers and to remove all of the remaining unnecessary paper that flows around the industry. But to what extent is the talk of utilities


still mainly that: talk? Campbell likens it to the buy-side of ten years ago, when firms gradually became comfortable with out- sourcing a lot of their operations to custo- dians. While they might have subsequent- ly switched providers, virtually no-one has reverted to in-house. ‘The sell-side perhaps has had more reason to stay in-house but cost pressures mean it is a much more via- ble, almost unavoidable, model now as they look at how they are going to operate.’ This


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is most clear in the US and Europe, he adds, but there is interest in parts of Asia as well. ‘The discussion has changed somewhat,’ he feels. Traditionally, it was the ‘forward think- ing operations managers or perhaps the for- ward thinking IT managers’, who were lead- ing the way but the topic has moved higher up many organisations, to the ‘C level’. Kromann believes that it has tradi- tionally been difficult for banks to consid- er utilities. ‘They have been very protec- tive of what they do and have considered everything as having a competitive edge. It was almost a conversation that we need- ed to create, along with our partners.’ Now, banks cannot afford to maintain the old ways of doing things so are having to con- sider working together. While the focus is operational at present and typically within the relatively standardised area of listed derivatives, he can see it becoming prev- alent in areas such as securities and OTC derivatives, as well as risk management. These are interesting times in the TCM


arena, in both developed and developing markets. There is still investment in the latter as banks move further into cross-asset trad- ing, while the former is beset by cost and regulatory pressures, to the extent that the old internal ways of doing business are being challenged. While more systems would be healthy, the existing suppliers are not com- plaining in a market that, while not back to pre-crisis levels of demand and investment, has been picking up for some time now.


© IBS Intelligence 2015 www.ibsintelligence.com


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