July 2016

Participating in an exclusive senior industry leaders’ panel, which was hosted by Global Custodian magazine in London recently, Satvinder Singh, Head of Global Securities Services, Global Transaction Banking at Deutsche Bank addressed 200 professionals on changes in the industry and how Global Transaction Banking (GTB) is responding to those changes through collaboration

What are the opportunities for your business?

Satvinder Singh: The most visible emerging opportunities are the result of a stronger focus in the industry on technology, compliance, new products and collaboration. Deutsche Bank’s response to disruption and regulatory change was to focus on breaking down our existing model into component products that now provide better client value and data transparency and enable liquidity optimisation and collateral mobility. We also saw the opportunity to better leverage technology towards regulatory compliance and, most importantly, to better embrace collaboration.

What are the threats?

Singh: There are three key topics to highlight: the cost of change; new market entrants and staying the course through the macro headwinds. Firstly, on the cost of change: we are faced with multiple new regulations that impact the cost income ratio of the business and whilst budgetary funding is thus largely applied to regulatory compliance, fewer funds are available for changes to the value proposition.

Secondly, we are witnessing new entrants moving into or further up the value chain, notably Fintechs. Although their lens may provide a fresh focus on the business model, we have a long way to go regarding end to end analysis and industry agreement on how best to apply new technologies. Transaction banking will have a significant role in that change. We were previously seen as a boring back office business. Now it is the decade of transaction banking.

What do initiatives such as T2S need to deliver to the industry?

[The new TARGET2-Securities platform intends to harmonise securities settlement in the eurozone, thus making settlement cheaper, safer and more efficient].

Singh: T2S needs to deliver on its initial benefits and create opportunities in both, collateral management and liquidity. The key point to remember is that we are in the midst of T2S. It’s not about interim fee cost savings but the delivery of total cost savings end to end, also using collateral and liquidity benefits. Those benefits underpin the delivery of a Front-to-Back approach to clients – at the back end you have the cost of settlement and reduced headline fees and at the front end, the use of collateral and liquidity as richer benefits.

Given regulatory disruption what is top of mind for the buy side and sell side right now?

Singh: Post financial crisis, collateral and liquidity are two of the most important topics in our industry. Collateral management is seen as the predominant risk tool. Anything that helps facilitate the use of collateral is beneficial. Initiatives such as T2S facilitate collateral management capabilities, leveraging pools of domestic collateral into a cross border environment. A global institution recently told me they have benefited from significant savings of several millions by more efficient use of their single liquidity pool.

The client also commented on the operating model benefits they have achieved by executing on their strategy, delivering asset segregation and process optimisation. In a nutshell, investors are looking for solutions that meet the demand for high quality collateral, incremental income and asset protection.

How will the global securities services industry look like in 20 years' time?

Singh: The pointers in my view are very evident. At Deutsche Bank, we are redefining our securities services provision with a Front-to-Back approach, end to end; we are embracing open architecture, and looking at where clients’ pain points are in order to deliver better value. That will continue. This also includes more active collaboration with our clients. An open mindset to collaboration and partnerships with non bank providers like Fintechs will increase and will shape how the industry looks in 20 years time.

Satvinder Singh

Head of Global Securities Services and Head of Global Transaction Banking, EMEA Ex Germany

Satvinder Singh

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