Can you tell us a bit about your new role at SGSS?
I head up the Societe Generale Securities Services (SGSS) business solutions team, a client-facing product team. I work both with our sales and product engineering teams to make sure we’re building the right product sets to meet our institutional clients’ needs.
Asset management is a big focus for us. We’re looking at where we have gaps in our products, where things can be improved, and whether we have full coverage for asset management needs. There’s a lot that we could develop, but we have to make sure it makes sense. Solutions have to fit with our existing product strategy and take us further in a particular segment. There’s a lot of decision making around where to invest in the future.
Mine is a new role, and comes as a result of a reorganisation within the coverage, marketing and solutions businesses. Previously there were client segment silos, which is not the most effective way of doing things, so we essentially turned the model on its side to make it more functional.
Now, we are organised by functions such as business management, solutions and product engineering.
We have people all over Europe working either with particular products, such as global custody, or with particular client segments, such as asset managers.
What kind of challenges are you facing? What are you spending most of your time on?
Because I haven’t had a predecessor, I’ve had to create new processes from scratch, which can be difficult, but generally is a great thing as I can put my own mark on the role.
It takes some time to know what’s going on and to get to know everyone in the different departments, but that change in dimension has been really interesting.
When engaging with asset managers, we’re focusing on the product set and on understanding what value we can add to asset managers. We have a very broad set of products and it has been a challenge to get to know all of them, and the people that run them, while also engaging with clients and trying to get a sense of what they need.
Just getting to grips with the number of different dimensions within SGSS has been a challenge. That and trying to speak French.
Is regulation a big topic for the products team at the moment?
It is, and has been for a while, so we’re very focused on trying to get regulatory solutions to clients. In particular, the second Markets in Financial Instruments Directive (MiFID II) is a focus for the whole industry, and I would say that best-execution compliance is a key point ahead of the January 2018 implementation deadline.
We have launched a trade execution service that the Societe Generale investment bank provides, allowing small asset managers to access the breadth of its trade execution capabilities.
We’ve combined that with our middle-office service for trade orders, so asset managers can reduce the cost of trade execution, and achieve best execution in compliance with MiFID II.
It’s an interesting combination of cost saving and efficiency, which is particularly helpful for smaller managers. So, we have seen a lot of interest in that.
We also have the General Data Protection Regulation (GDPR) coming in in May 2018. Although MiFID II is more imminent, GDPR involves some very hefty fines for non-compliance, and that will affect all players in financial services. Societe Generale is also a custodian bank, and we have a very large retail client base as well, so the leadup to GDPR will be a busy few months for everyone.
Aside from regulation, people are worried about the UK’s exit from the EU. We have seen quite a lot of interest in Gateway, our management company product in Ireland, which gives easy access to European fund domiciles.
Again, the interest is coming from those smaller managers who may not want to set up on their own from scratch. Small US and UK managers can quickly access a European domicile through a turnkey solution available in Dublin where we’ve already got the infrastructure set up.
Are you seeing any other notable trends?
We’re seeing a big interest in private equity and real estate investments, which I think is common to the market as a whole. That’s a trend we saw last year and it has continued to increase in Q1 2017, showing no signs of slowing.
Exchange-traded funds are also a big trend, so we are looking at how we can better service them.
There is also a continuing move towards outsourcing. There’s a perception that the big firms are outsourcing processes, but actually we’re seeing more of that with the smaller ones.
There is ongoing pressure on costs and on the cost-value chain, and that means asset managers want to reduce their own costs wherever possible. Trade execution is one aspect of this, but we’re also seeing more small and mid-sized asset managers looking at middle-office outsourcing as a product of interest now.
On the asset administration side, we’re seeing more interest in the whole asset safety debate, looking at the level of capital, who a company is contracted with, and so on. It will be interesting to see how each of these areas develops.
