Surge in digitalisation as cultural change sweeps through banking

Sohail Raja, head of execution platforms & UK chief digital officer at Societe Generale

February 15, 2021

Wholesale markets have seen a large increase in the number of people executing financial trades on electronic platforms, a rise directly attributed to the pandemic, as well as improved engagement. Those banks that had platforms in place have benefitted considerably, enhancing their collaboration with the buyside on quotations, analytics, pricing and post-trade interaction.

To support this collaboration, it is important that banks look at ways to automate their internal processes to make workflow and the sharing of information more streamlined and easier to follow, rather than being conducted on the more piecemeal basis that comes with email, post or telephone correspondence. For example, within SG Markets, if sales, client services or operations have a query, we have straight-through-processing to create, allocate and tracking tasks with auditing capabilities within SG Markets Workflow.

On the connectivity side, the core infrastructure has already been in place which has made it easier to set up, as has being able to work from a non-office location. Collaborations with fintechs have also increased, nurtured through existing relationships, which has become not only a lot more focused around data and machine learning, but also sustainability.

The handover

Nowadays, clients have a richer understanding of digital capabilities and are going on their own journey with technology. Banks need to be plugged into those journeys digitally to ensure greater co-collaboration with clients in creating and finding the solutions, as well as maintaining the traditional relationship management conversations based on a hyper personalisation engagement approach.

Traditional collaboration with clients used to involve a phone call, a meeting, coffee or a lunch, when the discussion was more about trading ideas, rather than pitching. Because of the pandemic, these conversations are now taking place virtually, and this instant connectivity has prompted a shift towards greater collaboration with clients much earlier on in the process.

Organisations that are embracing digital ways of working as part of their culture and the way they engage with clients can offer better support by including them at this creation stage.

There is already a lesson to be learned from retail financial services, where investors have proved to be able and willing to adopt the new technologies on offer, certainly in the expected level of sophistication. Being adept in adapting to multiple tools and providers is the cultural change that will likely be repeated by institutional clients.

We know that the change is coming and that the mode of operation will become different. Although we also know that this will not happen overnight, we need to be fleet of foot. But we also need to remain aware that, although clients have expressed their desire and intention to take more control, they still need support, advice, views or opinions on market opportunities.

Clients also need to know how we make data available, what kind of data we have and the workings of a collaboration that is changing from being just relationships to one that incorporates deeper conversations about pricing, solutions and structuring.

Particularly on analytics and Application Programming Interfaces (APIs) around those analytics, buyside clients have expressed a desire for more control while also examining their own data sources, as well as asking for delivery via APIs. The data sources and providers are being considered within an API mindset and those clients with quants or hybrid people who can do commercial and look at models using APIs have been leading the charge.

Different maturities

Banks are looking at the data sources they use to create funds or opportunities for their clients and examining how they can create a model or price a structure, or even put a fund together.

There is an opportunity to incorporate a better use of analytics tools and data on both the sell- and buyside. While banks are at different levels of maturity, with some taking a silo approach and looking only at a single asset class, we have, for example, embraced all Wholesale Markets Businesses and Asset Classes in an API-first style.

Infrastructure technology, especially through use of APIs, has proved extremely beneficial to financial services. And when it comes to assisting in the process and analysis of vast swathes of consumer data, it is now the time to make the most of machine learning to engage and build on existing relationships with customers.

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