Cash and custody The opportunity of complexity

International Cash & Custody Seminar 2017 “Adapting the new World” with Lego.

How can we deal with both the intensity and speed of change in our industry?

That was the question we set ourselves this year at UBS’s first combined Cash and Custody seminar, which we hosted in Switzerland at the end of March (see box).

There was much to talk about over the three days, both in terms of emerging challenges as well as those – like regulation – we all have been struggling with for some time.

Yet despite the daunting nature of many of the things we face, I think the main takeaways from our discussions were more positive than negative. While complexity is certainly the new norm in correspondent banking, we saw how it can be a source of new opportunities as well.

In it together

That was certainly the tenor of the keynote address by Andy Kollegger, Head CIC International and Transaction Services.

While we still have to manage the balancing act of being at one and the same time clients and competitors of each other – as well as, increasingly, venture partners – Kollegger pointed out that complexity had changed the nature of the discussion.

In an environment that demands and rewards collaboration, our existing long-standing relationships have led to a trusting environment in which partner firms can have open conversations on many different levels. As opposed to in the past, when sharing best practices was not always on top of the agenda, this new way of cooperation is proving to be a plus.

This sentiment was echoed by Eugene Meintjes, head of
Market Infrastructure and Strategy, who looked at network management. From regulation and costs to technological innovation and changing business models, here too the complexity has become enormous.

Paradoxically, through collaboration and consolidation Meintjes said there are also significant opportunities today to simplify processes. Banks would do well to understand developments and take advantage of them.

The regulatory avalanche

Not that we should underestimate present challenges, of course. In her deep dive into current regulatory developments, a representative from UBS Governmental Affairs painted a picture of the ongoing regulatory avalanche that was all too familiar to participants.

She also pointed out that banks face not just the cost and complexity of regulatory change, including the unintended consequences of well-meant rules. Regulators in many jurisdictions are also increasingly supporting Fintechs in a bid to foster innovation. The result is a growing number of new entrants to the industry that are challenging incumbents with new technologies, processes and business models.

Yet, as Peter Stephens, head of UBS's Crypto 2.0 Innovation Lab, made clear, there are opportunities to be found here too. In reviewing UBS’s own innovation efforts, and its embrace of emerging financial services technologies, he provided a good example of how banks can learn from and team up with Fintechs to their own benefit and the benefit of clients.

Innovation through people

Innovation, of course, is not just about technology. It's also about the people who bring it about. That’s why during the seminar we focused on the personal side of innovation as well. Both in our workshops and in the discussion on working successfully across cultures that I gave with my colleague Adrian Huggler, Head OPS Poland, we looked at how we as correspondent bankers can think about, visualize and work towards positive change.

I think this is an important aspect. Adjusting to a new environment is always difficult. But it is ultimately enriching. This is something we might all keep in mind as we cope with intense change and adjust to the new world that we are building in our industry.