CIBC Mellon
CIBC Mellon’s marketing head talks to AST about client expectations in a challenging marketplace
Claire Johnson has held progressively senior roles since joining in 1997 as senior manager of the Investment Funds Accounting Department.
In her current role, Johnson is responsible for the fulfillment of strategic corporate objectives through the development and implementation of the company’s marketing, product and client service plans. This responsibility includes the full range of product life cycle, branding and client integration activities that meet the needs of CIBC Mellon’s clients and prospects.
AST: What are some of your observations on the current state of the Canadian asset servicing market as well as outlook for the future?
Claire Johnson: We are cautiously optimistic that the Canadian market will continue its trends of stability and growth. While our country isn’t immune to global headwinds in today’s interconnected marketplace, high commodity prices and prudent economic policies should help Canada continue to outperform our peers.
Canada has growing employment, a strong dollar that is above parity with the US dollar, and a triple-A credit rating on government debt.
Recent market turmoil notwithstanding, the underlying factors driving Canada’s strong performance should continue in the future.
This means more of the world is looking to Canada for both best practices and investment opportunities.
AST: Is there any particular area in asset servicing where you see growth?
Johnson: Canada is responding quickly to global trends in financial services.
In terms of asset servicing, we expect clients will continue to demand products that are global in scale, but tailored for the specific needs of individual institutional investors.
We anticipate growing client interest in ETFs, alternate investments, collateral flexibility and securities lending. We also expect clients to continue to demonstrate increasing appetite for sophisticated reporting and greater insight into investment activity.
We believe the asset servicing market will continue to evolve, with a focus on global scale with local execution. Institutional investors will continue to turn to asset servicing providers to resolve the business challenges of delivering more and more information to stakeholders, enabling their growth and finding new operating efficiencies. We expect regulators in Canada and around the world will likewise continue to increase scrutiny and transparency requirements for market participants – and we look forward to providing our clients with expert support on this front.
CIBC Mellon will continue to be at the forefront of Canada’s asset servicing market, thanks to Canadian expertise backed by the local focus of CIBC and our access to BNY Mellon’s world-leading technology and infrastructure. We will continue to extend our market leadership through ongoing and significant investments in technology, people and processes; a continued focus on expert service, regulatory and compliance support for our clients; and ongoing enhancements to information delivery and reporting systems.
AST: From your vantage point, is there a shift to recommoditisation of custody services?
Johnson: Client expectations for what a custodian can do have evolved significantly over time, which is driving custodians’ move into the asset servicing space. What was a premium service five years ago is in many cases now a basic expectation. With the rapid growth of various requirements for information delivery, reporting and execution, clients are increasingly passing their needs along to their asset servicing providers – who can take advantage of scale – rather than building the necessary infrastructure in-house.
In today’s market, the question is no longer just “can my provider custody assets and settle trades”, but rather “how can my provider deliver mission-critical custodial services, plus support my evolving business and investment needs.” Today’s asset servicing providers are moving beyond custody and giving clients real time access to information and reporting on the full range of investments and strategies, including shorts, overlays and alternative investment vehicles.
AST: What issues are driving client demand and expectations?
Johnson: The lifecycle for custody products and services is speeding up, and client expectations continue to increase. In the past, clients wanted reporting in a 30-day cycle. Today, clients are looking for up-to-date information daily or even multiple times in a single day. Where execution and safekeeping were once the focus of service value, they have become basic requirements, with clients looking for their providers to deliver on-demand reporting, transparency, performance and portfolio measurement.
There is an increasing drive to move to a vastly expanded level of accessibility and immediacy. For example, BNY Mellon recently launched a Workbench Mobile application for the Apple iPad to meet client demands for on-the-go access to investment information.
While traditional custodial services have become commoditised to some extent, the shift into the asset servicing space has seen CIBC Mellon deliver robust, tailored services that add significant value and are anything but a commodity.
AST: There have been some regulatory moves to make custodians partially responsible for losses following the Lehman Collapse – how might this impact CIBC Mellon?
Johnson: Regulatory changes may affect financial institutions generally from time to time; we do not see any currently pending changes in the US as shifting responsibility to custodians or securities lending agents. And of course, should there be any regulatory changes affecting custodians or securities lending agents in Canada, we will assess the impact accordingly.
During the Lehman crisis itself, our strong governance, controls and information-delivery helped support our clients in minimizing risk and losses. We received high marks from clients for providing detailed and timely information about their positions and assets during the 2008 financial crisis.
CIBC Mellon’s clients with securities on loan to Lehman did not experience asset losses as a result of the Lehman collapse, and no trading restrictions were placed on our clients. Clients also had comfort from assets held separately from our corporate assets. We did not experience any liquidity issues as a result of the Lehman collapse. Our performance during the Lehman collapse is a powerful testament to the strength and effectiveness of our governance and risk management processes.
