Stripping the Labels – companies are moving boldly into digitization
Four seasoned members of the asset management community shared a common battle cry at the 2020 NICSA GMM panel “Stripping the Labels”: the COVID WFH scenario has turned digitization from a backroom discussion to a boardroom imperative. Whitfield Athey, CEO of Delta Data joined industry peers Gary Casagrande (Moderator), VP of Global Market Strategy, Confluence, Jay Nusblatt, Managing Director, Global Investment Companies, DFIN, and Janelle Prevost, Head of Strategy and Digital, Asset Servicing, BNY Mellon in an animated discussion on the blurred lines between the back and front office and how this impacts the working model of the future.
The group began with a historical review of the territorial approach to enterprise data management, which resulted in the siloed office practices of today. While the roles of each function between front, middle, and back offices are clearly defined and understood on paper, in practice to support client needs efficiently the clear delineations on paper have become muddy. In an organic approach to internal efficiency, activities must cross boundary lines and each office’s interconnected functions must be built upon synergistic tenants including interoperability between layers. This interoperability is found through the common denominator of quality data and leveraged through software enablement. This shifting workstream has created a new need for third party solutions that straddle the entire organization, from front to back and provide an integrated platform from which each office can operate interdependently, following the lifecycle of a trade. This new animal feeds on data.
Every company caters to its customers, with the challenge resting on internal teams and outsource partners to adapt to the need and manage in the most efficient manner possible. The common denominator to adaptation and resiliency in support of an ever-changing set of requirements is data and embracing change. According to Athey, the current COVID environment has provided a once in a lifetime accelerator for an industry that typically is slow to change and move, resulting in an industrywide ‘aha’ moment and a realization that waiting for change to be required is no longer an option. The drive towards a new, holistic digital reality is rapidly exposing the creaky ductwork of manual processes that have been the unspoken bane of the industry for years, further hastened by the compounding challenges of a need for increased security in an age of volatility.
Janelle Prevost of BNY Mellon cited the fact that 99% of their workforce has been moved to a WFH scenario, the company’s laser focus on digital, and their work with helping client’s access and use digital solutions that they may not have used in the past. COVID has accelerated the development of BNY’s digital toolkit and increased the need for strong data management to maintain the resilient end to end service the firm is known for. Jay Nusblatt of DFIN echoed this sentiment, commenting that old techniques are limiting the effectiveness and should be replaced.
The group discussed why dated processes still exist while clients are clamoring for digital, with Athey commenting that legacy systems are like security blankets, which provide a little comfort but almost no protection against the coming storm. Finally, the discussion turned to the elephant in any room: how does a firm prioritize what may be a monumental effort, in light of all the other projects that demand C suite buy-in. Athey offered an insight that one of his company’s customers, a tier-one asset management firm, entered March 2020 with five major initiatives on their plate and exited with two, both of which shared roots in the firm’s digital transformation program. Janelle Prevost of BNY Mellon offered guidance that every firm will need to determine the appropriate digital operating system that works with their client’s needs, and at the end of the day delivers the most critical element of any business decision: ROI.