Standard Chartered’s deal with BlackRock’s Aladdin involves pitching the front-end platform to asset managers in emerging markets, and integrating it with the bank’s securities services.
This provides a front-to-back offering, priced to appeal to those larger fund houses that are already cross-border and multi-product, says Margaret Harwood-Jones, Standard Chartered’s Singapore-based managing director and global head of securities services.
“The technology element is mission-critical in emerging markets,” she said. “This is an enhanced product offering to meet asset managers’ existing and emerging needs.”
The deal is part of a broader trend among global and regional custodians to establish competitive ecosystems, leveraging partnerships to offer asset managers and asset owners services that are mass customized.
For example, State Street acquired front-end portfolio management system Charles River, while BNY Mellon has built out a range of partners, including Bloomberg—and Aladdin.
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StanChart’s relationship with Aladdin is different, however: it’s actively co-selling Aladdin’s front- and middle-office services to its clients or prospects among the 40 emerging and frontier markets in which it operates.
“Asset managers and asset owners in emerging markets are underserved when it comes to having a front-to-back, proven, unified, and simple solution,” Harwood-Jones said.
For asset managers in these markets, the pitch is that they can get a “best of breed” outcome that integrates Aladdin with the bank’s post-trade services, custody, and fund administration.
StanChart and Aladdin are piloting the integrated service with marquee customers, one each representing the Hong Kong-Guangdong-Macau Greater Bay Area, Southeast Asia, and Africa.
Standalone these services might still be too expensive for local asset managers, but they can be bundled for local or regional leaders – and the efficiencies of a front-to-back service prepare managers for growth, she says.
The logic also makes sense for Standard Chartered’s business in securities services. Given it operates in so many smaller markets, each with its own regulations, market infrastructure, and players, services become more bespoke and less profitable.
Bringing top local clients onto a global platform can help them improve their sophistication and also make them easier and most cost-effective to serve.
“This helps us move the industry to consistent operational standards, although we still must adapt to local nuances,” Harwood-Jones said.
Open banking, custodian-style
Looking forward, she says the Aladdin partnership is a reflection of the growing importance of open banking.
“Within the broader technology conversation with clients, we are having a data conversation,” she said. Client needs are bespoke, but addressing them via a platform opens the door to additional participation.
“We’re working toward the adoption of open banking, which means working with clients’ fintech providers and other counterparties – even competitor banks,” Harwood-Jones said.
“Instead of many parallel conversations, we’re beginning to have integrated ones about how technologies and systems can talk; about the flow of data; and better technology solutions for foreign investment flows into local financial infrastructure.”
Often this is minutia. “Attention to detail is important,” she said, citing a recent case in which adding a single field of data delivery to a client in South Africa resulted in a vast reduction in queries.
Beyond this mundane if important iteration, though, the bank is looking at platform models to drive bigger change, such as networks on distributed ledgers and tokenization.