RBC Investor & Treasury Services (RBC I&TS) believed that its network of agency banks could bring considerable value beyond traditional custodial activities. Tighter integration with its network would be a foundation for deepening collaboration to enable problem-solving and innovation, delivering a network effect that RBC I&TS would extend to its end clients. The firm, a specialist provider of asset services, custody, payments and treasury services for institutional investors worldwide, sought to transform its subcustodial relationships from providers, tactically focused on transaction processing, to strategic partners, an initiative it calls Network 2.0.
Reimagining the network model is the bold vision of Francis Jackson, Chief Executive Officer for RBC I&TS. Doing things differently, Jackson believes, is essential in a competitive environment, and the network is key to differentiating the client experience and enabling business growth.
Two years later, RBC I&TS has reduced its providers from 23 to 11 and transitioned $3.5 trillion in assets across 88 markets in a compressed timeline amidst the unexpected challenges of the COVID-19 pandemic. However, this is only the end of the beginning. How has RBC I&TS set the path for strategic partnership, starting with its RFP selection process and transition, and where will Network 2.0 go next?
Not a run-of-the-mill RFP process
Early on, RBC I&TS challenged its agency banks to think about new ways to combine intellect, resources, and ideas to create a better network solution. Innovation workshops were integral to the RFP assessment. Participants were asked to consider how they would innovate if given a blank canvass. “Some firms thought carefully about the problems and the opportunities,” says Jackson. “Others had an entrenched mentality about what could not be done. Standard Chartered came to the table with great ideas, which differentiated them in the RFP process.”
Discussions around innovation prompted a greater level of understanding of how RBC I&TS serves its underlying clients. “The RFP process forged cultural alignment, the conviction that we’re in this together, and shared expectations, which established the proximity that underlies a strong relationship,” says Margaret Harwood-Jones, Co-Head, Financing & Securities Services, Standard Chartered Bank. Jackson says the whiteboarding exercise put banks like Standard Chartered in an advisory role, laying a foundation for strong collaboration.
The measure of a good relationship
Dialogue was also critical to a successful transition, given the inherent complexity of transitioning trillions in assets spread across individual markets, including depository positions, within a compressed timeline. “Following the decision to engage with Standard Chartered, the bank’s professionalism quickly came through,” says Jackson. “We stopped being too polite. We became real people getting to work.”
This proved vital when the COVID-19 pandemic caused unforeseen challenges and pivots. For example, Standard Chartered worked with in-country central securities depositories to gain acceptance for digital forms with electronic signatures, where paper and ink were normally required, in order to open accounts and move assets during the pandemic lockdown.
Jackson sees open, frank and transparent communication as the measure of a good relationship, which enables an agile response to unforeseen challenges. “The ability to be flexible must be based on a clear purpose and objectives, set forth by senior leadership, so that working groups can adapt while staying the course,” explains Jackson.
The network reimagined
Strategic partnerships should bring mutual benefit. “The opportunity is to stop thinking of ourselves as individual units and think of ourselves instead as two parts of a whole,” says Harwood-Jones. “This is not a conversation you have with anyone. Because of what we’ve done, we’ve earned the right to enter into a partnership mode and work out where we go next.“
The immediate next step is to identify common areas of collaboration to drive different outcomes that would not be possible working alone. Priorities include:
- The first shift will be from moving paper to moving data. Digitisation will allow the partners to reimagine everything, from documentation and signatures, to account openings and sharing market insights. RBC I&TS and Standard Chartered envision being able to match data and discern patterns as the basis for value-added services.
Pandemic learning can accelerate best practices in digitisation, says Harwood Jones. For example, subcustodians should work with local markets to encourage temporary behavioral shifts towards digitisation during the pandemic, such as wet signatures, to become permanent.
- Seamless end-to-end client experience. Network 2.0 will provide a much tighter front-and-back-office integration, process standardisaton STP automation, and rationalisation across markets. This will reduce intermediation lags in the securities services chain. For example, as a proof of concept in emerging markets, Standard Chartered analysed queries of MT 599 free-form messages in one market and reduced queries by 60% by changing one data field. Longer-term, Jackson envisions the application of technology leading to endless capacity. As a result, investors and issuers will be able to connect seamlessly to markets at a fractional cost.
- Ease of doing business. A simplified infrastructure will enable investors to connect to issuers in emerging and frontier markets where RBC I&TS lacks the expertise to deliver on its own. “Banks like Standard Chartered with boots on the ground are best placed to support this vision,” says Francis. “This requires an extensive network that the biggest global custodians do not have.”
In forging strategic partnerships, advises Jackson, be clear on your purpose from the beginning. Make sure that your selected partners understand your North Star to focus not only on current needs but also on future needs and on discovering as yet unimagined possibilities. “Choose a partner carefully,” advises Jackson. “It’s a marriage, not a date.”