In a rapidly changing environment organisations are having to adapt their businesses as they find themselves in a confluence of activities where positive change meets disruption, according to David Pember, Head of Sales and Relationship Management for BNP Paribas Securities Services in Australia.
Despite the challenges and uncertainty this may present, the future of asset servicing is bright with opportunities for industry participants to further strengthen their businesses. As a custodian, we believe it’s never been more important to remain a solid partner, and to continue to guide clients through this transformation.
Super fund consolidation to continue
Regulation continues to influence the future structure of the industry as it aims to foster an environment where members thrive in stable low-cost funds with greater transparency.
The ever- increasing pressure and need to reduce costs at organisations combined with increased focus on positive member outcomes has accelerated the pace of super fund consolidation.
Mergers are complex and require careful evaluation to ensure smooth transition. Consequently, not all potential mergers complete. As strategic partners, custodians are an integral consideration in the process. Our knowledge, insights and extensive transition experience can help businesses navigate the complexities of fund transfers.
At BNP Paribas, we have an active insights programme allowing us to share the latest information on local, regional and global regulations and trends that may impact our clients. Appetite for information and participation in events is very high.
Recently, Josephine Maiorana, Head of Regulatory Watch and Market Advocacy, Asia Pacific at BNP Paribas Securities Services, took clients through the upcoming Portfolio Holdings Disclosure changes, when it takes effect and how we’re helping clients through these changes.
Customer advocacy and transparency of assets is growing
In this environment of continued – and maybe even amplified – change this year, the voice of the member and investor is becoming increasingly evident at a societal level, influenced by COVID-19 and climate change. Investors understandably want to know how and where their money is invested, particularly across key ESG principles.
In our recent ESG Global Survey, which surveyed 356 asset owners, official institutions and asset managers, a significant majority of Australian investors cited board or activist pressure and external stakeholder requirement as key drivers for incorporating ESG.
Again, regulation is playing a major role. The APRA Superannuation Data project that went live late last year, and the European Union’s sustainable fund’s holdings disclosure requirements (SFDR) launched in 2021, are all driving increased transparency and not just for ESG assets.
This appetite for knowledge combined with regulations is placing further pressure on the industry to demonstrate that transparency to all key stakeholders. At BNP Paribas, we seek to partner with our clients and help them improve data transparency across the services we provide. In 2020, we were awarded The Asset Triple A Sustainable Investing Award for best securities lending solution of the year after working with one of our key clients to help them relaunch their unique ESG Securities Lending programme.
Another way we can help clients improve data quality is with the new agile reporting available on our recently launched Manaos* marketplace. Manaos’ open platform provides ESG data, reports and ratings of the portfolio via multiple data sets, screening it against the different ESG principles and data providers. Offering simplicity, flexibility and scalability, it promises to provide better filters and overlays so clients can quantify and measure the ESG assets they have in their portfolios.
* Manaos is developed by AELX SAS, a technology subsidiary of BNP Paribas Securities Services.
Partnering with clients is more important than ever
Being a partner to our clients has always been important to us. We continue to be aligned and ahead of current market trends, providing insights to clients as they increasingly specialise their business models.
Whilst we still see demand for bundled solutions, we are seeing a trend, particularly in larger complex funds, towards leveraging multiple partners to meet ever-increasing needs. As a custodian, we have responded and evolved our product offering by unbundling the services that we offer. For example, in the investment sector, we are seeing higher allocations to direct assets such as private capital and infrastructure, which are still seen as specialist asset classes.
A superfund might employ a custodian and fund administrator for their mainstream funds and then have a specialist for their private capital or infrastructure allocations. This could be an integrated or standalone data provider for these assets. We can provide either of these services depending on the client needs, including end-to-end servicing valuation, reporting, ESG filtering and transparency of assets and holdings.
The future of asset servicing
As we mentioned earlier, we believe the future of asset servicing is a positive one. Our unique European heritage gives us exposure to a fast-changing global landscape, particularly on the ESG front. Europe is the heart and soul of developments in ESG and a fertile ground for a burgeoning Private Capital and Infrastructure sector. We are uniquely positioned to provide value in these areas.
Our primary focus remains on continuing to deliver for our clients by offering comprehensive services bundles and, where appropriate, unbundled services for specialist requirements. As a business, we also continue to develop connectivity with other market participants such as registry systems and stock market trading platforms. As a reporting and data custodian, we see ourselves as integral to our clients’ business and how their organisations move forward.
We are committed to supporting our clients through this year’s transformational changes – whether they be corporate activity, regulatory or reporting changes – to help them achieve the next evolution of who they are and where they want to be, and better meet the needs of their own clients.