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Standard Chartered Bank’s innovative ‘single-touch’ custody model offers investors better market access

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Standard Chartered Bank’s innovative ‘single-touch’ custody model offers investors better market access
Standard Chartered Bank’s innovative
‘single-touch’ custody model offers investors
better market access
“The capabilities we’re rolling out with TCS BaNCS have placed
us at the leading edge. This will change the industry.”
-- George Nast
Managing Director, Global Head of Product Management,
Transaction Banking, Standard Chartered Bank
Abstract
Standard Chartered Bank found that its global custodian model and legacy systems were
limiting its business. Investors were already displaying a shift towards local custodians due
to the direct access they offered. The Bank partnered with TCS Financial Solutions to
implement an innovative single-touch custody model, which could integrate the benefits
of local and global approaches and offer seamless services. By implementing TCS BaNCS for
Custody, Standard Chartered provided investors with a direct pipeline into the
fast-growing markets of Asia, Africa, and the Middle East.
About the Client
Standard Chartered Bank is a prominent international banking conglomerate with a rich
150-year history of serving customers. With over 90,000 employees, the bank has a
presence across 71 countries with 90% of its income and profits coming from the Asian,
African, and Middle Eastern Markets. This unique footprint enables the Bank’s clients,
including the world’s largest global custodians, broker-dealers, fund managers, and
institutional investors, to take part in the rapidly expanding range of opportunities in
emerging markets.
Client
Standard Chartered Bank
Industry
Capital Markets
Offering
Custody
Business Challenge
A new model for direct market access for
convenience
When choosing a custodian bank, an investor has to
choose between working with a global custodian that
provides convenient and easy management vis-a-vis
working with several local custodians who can help
fasten reporting and manage risks better. Standard
Chartered Bank wanted to revamp its existing
technology system to provide customers with more
relevant, real-time information about their holdings
reduce risks, manage cash better, and be able to
identify new opportunities. The Bank also wanted to
capitalize on increased investment activity in emerging
markets, increase operational efficiencies and minimize
business and reputational risk.
To meet these demanding market expectations, the
Bank considered a novel approach to custody -- a
single-touch custody model that combines the single
window of the global custody model with all the
benefits of directly connecting to local custodians. The
Bank launched this initiative as part of its Strategic
Target Operating Model (STORM) program to transform
securities services and deliver world-class capabilities
consistently across its entire network. TCS BaNCS’
successful track record in implementing its corporate
actions solution across leading custodians worldwide
made it the partner of choice for this initiative.
With TCS BaNCS for Custody and as part of STORM I, the
program covered securities asset servicing capabilities,
including corporate actions. STORM II, which
commenced in 2010 included securities services core
settlement capabilities (trade capture, settlement, and
safekeeping) for 24 countries.
TCS BaNCS Solution
A solution that supports the innovative model
TCS BaNCS worked with Standard Chartered to set up
an enterprise-wide integrated custody platform across
multiple entities, supporting both direct and
international custody flows. TCS’ Mastercraft Suite and
TCS BaNCS’ Service Integrator Framework helped
extend connectivity across multiple market interfaces.
The platform could easily integrate with external
market entities such as brokers, depositories, and
custodians.
Adaptors enabled the use of standardized messaging
formats such as with SWIFT and FIX. The solution supports
different asset classes such as equity, fixed income, bonds,
money market securities, and mutual funds, with the
capability to easily configure new financial instruments.
The team designed and executed an account operator
framework, which would help differentiate the Bank from
its competitors. The solution enabled
Straight-Through-Processing (STP) from trade to
settlement. Real-time updates were offered on positions,
cash, exposures, and accounting and workflow and
exceptions management were streamlined, with effective
work allocation and escalation. Multiple legal entities could
also be maintained on the same application and database
schema, with entity-wise book-keeping and street-side
relationship maintenance. The solution is compliant with
evolving market practices, such as market cutoffs, holidays,
currency holidays, and market-level settlement tolerances.
The solution also offered:
Rules-based processing capabilities: The solution’s
Securities Processing module includes a rules manager
component with templates that allows the Bank to easily
set up and manage rules for processing. This engine is
flexible, with the capability to address different parameters
with wildcard values.
Position keeping updates: The TCS BaNCS solution offers
flexibility in defining the granularity of position keeping. It
provides updated position balance records, including
trade- and value-dated balances. The solution supports
reverse and backdated transactions, and position buckets
are available in SWIFT formats. It also allows portfolio (SCA)
and agent transfers from multiple position (receive and
deliver) perspectives.
Reference data management: The platform synchronizes
lending and custody transactions under one account. It
offers projections on inbound and outbound cash
transactions and allows categorization of customers as
platinum, gold, or standard members based on service
levels. Standing instructions were enhanced to achieve
more from automated facilities.
Effective Foreign Exchange (FX) handling: FX
confirmation (as per MT304) and deal matching are
captured; so also, automatic creation of FX orders.
Third-party transactions are captured manually and
subjected to STP.
Results
Unlocking the value of a global network
Standard Chartered Bank now has an integrated custody
system that effectively addresses global and local
requirements. 33 of 40 markets were integrated within three
years of the solution’s implementation. This included
high-volume centers such as Hong Kong and Singapore, and
the emerging market of Jordan. The multi-entity platform
provides unrestricted access to markets, with flexible reporting
mechanisms and reusable business processes.
The single-touch custody solution has profound implications
for institutional investors, broker-dealers and global
custodians doing business with Standard Chartered.
“Clients operating in our footprint will have single-touch
access to any or all of our markets through a single bundle,”
says George Nast, Global Head of Product Management for
Transaction Banking at Standard Chartered. “We can offer
flexibility in tailoring a set of market solution to a client,
whether it’s an investor or an intermediary, depending on their
needs.”
Transactions processing has increased with the automation of
custody operations at a high STP rate. The Bank now has
access to accurate, up-to-date information on securities and
transactions. The account operator model has simplified the
broker business structure, and standardized processes offer a
consistent customer experience across markets.
The rollout process during the deployment was industrialized
using TCS BaNCS standard data migration suite to ensure
repeatable country rollouts with high assurance of success.
Critical markets and key business features were prioritized, so
that the bank gained immediate, incremental business
benefits and stakeholder visibility with this agile approach.
While the Bank’s business efficiencies have been accelerated,
further gains are expected from 2016 onwards, on completion
of the country rollout phase. With an automation rate of over
90% for corporate actions, Standard Chartered and TCS BaNCS
won The Asian Banker’s prestigious Best Trading Back Office
Project Award for 2011.
Any investor demanding efficient, transparent, and
seamless integration in emerging markets will find a
compelling value proposition in the market-leading single
touch custody services of Standard Chartered. Guided by
the vision of the bank’s leadership and aided by the
technology of TCS BaNCS, Standard Chartered has begun to
unlock the unparalleled scope and reach of its global
network. “We will be the go-to custodian and the go-to
provider of market access for our clients across Asia, Africa,
and the Middle East,” says Nast. “We’ll have the capabilities,
the network, and the integrated service across a variety of
products and functions that will make us the leading
provider of investor and intermediary services in our
footprint.”
“Deploying a single,
market-leading custody
platform has enabled us to
materially improve the
quality and consistency of
services to our clients.
The continued partnership
with TCS in enhancing
future services provides us
with the sustainable
foundation to support our
growth ambitions in our
chosen markets.”
-- Alan Naughton,
Managing Director, Head, Securities Services
and Corporate Agency and Trust,
Transaction Banking, Standard Chartered Bank
Why TCS BaNCS
The TCS BaNCS product suite for banking, capital markets and insurance enables business
transformation in financial services. Increasing operational efficiency and helping financial
institutions stay agile, our solutions deliver a competitive edge with unmatched certainty! We aspire
to be better than established benchmarks, which is why we have embedded an Alpha (“ ”),
representing superior returns delivered to our customers, consciously and prominently within our
brand. The plug and play, component-based product suite consistently turns in impressive
benchmark results, with a fine-tuned, highly scalable technology architecture that supports financial
institutions with the highest capacities for transaction volumes, peak transactions per second, and
transaction history size. With such a track record, it is only natural that the TCS BaNCS product suite
can help financial institutions of any size gain a distinct, competitive edge.
For more information, visit: www.tcs.com/bancs
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