March 2018

SPONSORED PROFILE: The many things data can do

Data_globeRBC Investor and Treasury Services is engaged in a multi-year technology programme to improve its digital offering and unlock the value in clients’ data. Andrew Gordon, head of Asia, explains the strategy. There was a time when financial technology was a dry subject. Rarely discussed with enthusiasm, fintech was relegated to the back office. Those days are gone. Today, companies across the financial world are putting technology at the top of their agendas. From blockchain to robotics, fintech is trendy, fast-moving and attracting the attention of managers across the finance world. Andrew Gordon, head of Asia for RBC Investor & Treasury Services, says his business is no exception. The front-end
To ensure its processes and systems are top class, RBC I&TS has spent the past 18 months working on a multi-year technology project. There are several prongs to the initiative, but an important one is the aim of improving the user experience for the company’s clients. The scheme for solving this problem is a unified interface, RBC One, in which staff at clients’ firms, whatever their role, can access the information and services they need. The system brings together various functions that had formerly been accessed separately into a single client front-end. “What’s important is you can customise the view based on what your role is,” says Gordon. “If I’m a corporate actions clerk, I can log in and see pending corporate actions on the landing page. The fund accountant can log in and see information about asset values. The COO [chief operating officer] can log in and see a graphical pie chart that shows performance against agreed key performance indicators.” Gordon says the system was developed with direct input from clients throughout the development process. Today, RBC One has around 1,800 users, with more being continually onboarded. “RBC One makes it easier for clients to deal with us in terms of receiving data, knowing where their activity is, getting reports and sending us instructions. It’s a step up on what we’ve seen out there from other providers.” Being agile
To get the project going, RBC I&TS has borrowed techniques from the software industry. Gordon’s familiarity with the agile method, an approach to software development that employs “sprints” and “scrums”, gives another example of how technology has moved from a back-office function to be at the centre of finance. Indeed, some of RBC’s offices are beginning to resemble the premises of technology firms. Instead of the somewhat rigid structures of a traditional banking organisation, these areas are composed of “multifunctional teams” which put a premium on collaboration. The company has the largest number of these technology labs in its home city of Toronto, where there is an active technology scene fostered by universities, which are helping Canada emerge as a leader in artificial intelligence. The prize
Perhaps the most attractive resource for the company’s technology teams is data. Like other custody and asset services firms, RBC I&TS gathers an enormous amount of information in the course of its operations. Historically, the industry has lacked the tools to fully ulitise this resource. If data can be likened to oil, the finance world was, until recently, stuck in the 19th century – it could do things such as light oil lamps, but it had not yet invented the combustion engine. “Big data” is hoped to be the solution, or cluster of solutions, that will unlock the value of the data collected by the industry. Gordon says there are several respects in which his firm can mine its data to the benefit of its clients. Perhaps the most exciting is the opportunity to use fund distribution data to assist sales teams. Because it provides operational services that cover transfer agency, RBC I&TS has a wealth of knowledge about which funds are being sold to whom. This quantity is, in fact, constantly growing, thanks in part to the requirements of regulation such as the second Markets in Financial Instruments Directive (MiFID II) in Europe. This knowledge can be put to good use. “It’s possible to see what sorts of products are being sold to what sorts of investors by what sorts of channels,” says Gordon. “You can dig down into multiple layers to find out that, if a particular market segment is buying emerging market equities, are they buying them on a currency-hedged or unhedged basis? This knowledge will help with sales and product management. The whole area of distribution is rich for being more data-led.” Portfolio managers can also benefit from the data RBC I&TS collects. Using modern tools, they can analyse their portfolios and compare them with other data sources more easily than in the past. Then there is operational data, for instance information on the performance of outsourced providers. RBC I&TS can assist its clients by providing tools to measure these providers against key performance indicators. Finally, data plays an integral role in risk management, which is becoming an ever-more crucial function in the financial industry. Collaboration
In order to realise the benefits of technological progress, RBC I&TS is working with a larger set of partners and, says Gordon, is much more willing to collaborate where once it might have developed products in-house. For example: to complement RBC’s in-house expertise, the firm’s partnership with Thomson Reuters now provides regulatory updates to RBC clients. “Their market coverage globally is impressive. Could we go out and hire a team of people to do that kind of thing ourselves? Yes, but it wouldn’t make sense. It is far more effective for us to partner with an expert, so our internal teams can focus on other value-add services for clients.” This is the same strategy the firm employs in its dealings with financial technology start-ups. Rather than seeing these emerging businesses as a threat, Gordon sees them as complementary. “To build a successful business you need good products and good distribution. Not many fintechs have good distribution. Banks don’t always have the best product or capability in every area, so working together makes sense.” The importance of technology in the financial world will only grow as new developments such as blockchain and artificial intelligence alter the landscape for banks and other companies. RBC I&TS hopes its investments in technology will keep it on the front lines of innovation. ©2018 funds global asia

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