In recent years, the rapid growth of digital infrastructure, digital channels, and the wider digital ecosystem is driving innovation that is impacting almost every aspect of the investment value chain and raising expectations. Also, changing regulatory and reporting requirements, as well as increasing competition, have resulted in rising costs for clients and fee compression for service providers.

Asset owners, managers, banks and broker-dealers can benefit from a common platform that will allow them to transition smoothly from traditional manual operations to digital infrastructure.

Data fragmentation

Asset servicing has traditionally been a very labour-intensive process and difficult to scale. As business demand grows and new services are required, onboarding of clients, coordination with various service providers, and integration of different systems can be cumbersome.

There are also challenges arising from the fragmentation of data across multiple systems as well as the standardization of data among large asset owners which use multiple asset service providers.

As an asset owner’s portfolio starts to diversify, the same portfolio will be dealing with different characteristics of assets, which means there is a need to assimilate data from disparate systems to provide a unified view.

In addition, typical asset owners, managers, banks and broker-dealers usually have limited in-house expertise in transitioning from traditional to digital operational infrastructure. This is one reason why they resort to outsourcing this transition to asset service providers.

Better client experience

Platform business solutions provide a network where asset owners, managers, banks and broker-dealers can access an extensive suite of digital infrastructure solutions in a format that will be compatible with their requirements. This model enables the offering not only of core services but also of third-party solutions such that asset owners and managers can consume a collection of services from a single platform.

One of the primary benefits of the platform business solutions model is that better client experience will result from collaboration between asset service providers and their clients. 

No system or solution is perfect. How do you perform your exception management? Are exceptions highlighted in the right place, the right time to the right people? How do you design these workflows? Those are the kinds of benefits that accrue, and more importantly, the platform business solutions make the provider more responsive to client demands.

In addition, the securities trade settlement cycle is getting shorter with the move to T+1 in some markets, whereby trade-related settlements need to be done within one day from the completion of the transaction. This means that asset service providers need to be a lot more responsive by having a solutions-based model with lower marginal costs and greater efficiency.

Cost savings and scale

Perhaps the most important aspect of the platform model is that it enhances cost savings and risk management. 

In today's competitive environment, many organizations find the need to outsource various tasks. Platform business solutions not only help improve efficiency but also offer the potential for scalability. This is particularly evident in an asset management firm or financial institution where cost increases are directly correlated to business growth.

How the platform model helps asset service providers and their clients is the ability to process low-value, high-volume businesses in a more efficient manner. 

Moreover, the platform model removes part of the operational risk because software is used instead of manual processes, which are subject to human error.

One-stop service model

Platform business solutions allow asset owners, managers, banks and broker-dealers to address their requirements holistically from a single point of contact by offering core solutions as well as ancillary solutions that they would need to run their businesses.

As the leading securities services provider in Asia, HSBC pushes the boundaries in digital asset servicing with its "Business Solution as a Service", a one-stop model for its clients to meet their end-to-end post-settlement needs, and also integrate other front-to-end investment solutions such as cash, FX, analytics, risk management, order routing, and distribution.

Tapping on its reach and market expertise, HSBC provides a single connectivity point that can improve efficiency for its clients, creating an ecosystem of platforms that revolutionizes the complex and fragmented landscape of the post-trade environment.

“We aim to work with clients in a true partnership mode by tailoring to their specific requirements, thus, allowing them to achieve cost efficiencies and scalability, through our expertise in asset servicing that combines our technology, experience and network strength,” says Rajeev Tummala, Director, Digital, Data and Innovation, Markets & Securities Services, HSBC.

Become future-ready

With rising innovation and increasing disruption in the asset servicing world, every asset owner, manager and broker-dealer faces tough choices in adopting new services to find new competitive advantage or be left behind.

The platform solutions model offers a compelling solution. Instead of establishing a network of bilateral relationships throughout the post-trade value chain, asset owners, managers, banks and broker-dealers select products and services that are best suited to their needs, reducing the hassle of outsourcing and a range of costs associated with it.

"Platform business solutions as a paradigm is all about creating software-defined ecosystems, or ecosystems where technology has a more significant role to play while the human element is largely involved in an oversight or governance function," Tummala adds.

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