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State Street notches data wins in Asia first

The global custodian wants to repurpose data capabilities so it can engage clients more strategically.

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State Street’s new ‘data as a service’ platform has won clients in Australia and now Japan, its executive say, making Asia Pacific the first region in which it is using its recently upgraded data capabilities to provide new or better services to asset owners.

It has yet to catch on with pension funds and other customers in North America or Europe.

The bank has been engaged in a long-term process of digitizing its internal processes, out of which emerged its service, DataGX, but it is also starting to look longer term at potentially more transformational technologies, says Ian Martin, executive vice president and Asia-Pacific head of global services and State Street Global Exchange.

Peter Mo, senior vice president and the bank’s regional chief information officer, says the bank has spent several years rebuilding its data architecture.

Putting data to work
Now it is looking to rebuild its technology fundamentals to take advantage of its consolidated information. For example, the bank is looking at internal use cases for distributed ledger technology, machine learning and cloud computing.

It wants to use these technologies to add value to DataGX, both for more efficient processing as well as to deliver new services to customers, such as making it easier to analyze performance or file regulatory reports.

Progress can seem slow. The idea of going to a third-party cloud provider is fraught with cross-border regulatory concerns, among other things, Mo says.

But the bank has begun some internal proofs of concept around DLT. “We can cut down the number of systems required to process a lifecycle of a trade,” Mo said.

Blockchain initiatives
The bank is also looking to DLT for custody services such as principle securities finance and processing bank loans; these are activities that can involve multiple third-party banks.

“It’s time-consuming to update multiple ledgers when 15 banks are involved in a deal,” Martin noted.

The bank is also participating in consortiums such as R3 and the Utility Settlement Coin project, although in the case of R3, at least, its objective is to understand the tech and the intellectual property so that it can internalize them.

Similarly, the bank monitors fintech companies but has yet to partner with any, because of uncertainty over how to integrate outsiders with State Street’s core technology.

Old clients, new engagement
But while cutting-edge tech looms in the bank’s future, today its focus remains on DataGX, part of its State Street Global Exchange business.

“Data’s now an asset,” Martin said. “As a trust bank, we have a lot of data.”

Mo, who joined as CIO last year from Credit Suisse, restructured the firm’s I.T. to enable DataGX to consolidate third-party asset-manager information for asset owners.

“Asset owners need to look at things holistically,” Mo said. “They want a single source of data.”

Much of the work over the past seven years has been about reconfiguring the basics. The bank first revamped its operations and I.T., including expanding data centers in Hangzhou and Bangalore, and then, three years ago, launched what it calls Beacon, a plan to build and deploy data-driven technologies to improve internal operations and client experience.

The little things still matter: Martin says the bank still receives tens of thousands of faxes a day. Many of these still demand manual intervention, which leads to higher costs and errors. Incomplete information needs to be reconciled. The bank’s priority has been to minimize such daily headaches.

“What we’ve done is improvement, optimization – keeping the lights on,” Martin said. “We’re now contemplating something more dramatic for the next three to five years. We’re a custodian bank so we still will do what we do: cut a NAV, settle trades, deliver reports. But we will also deploy a new suite of technology to do this in a radical way.”

 

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State Street notches data wins in Asia first