revolution that goes beyond automating
one or two processes, we could turn some
of these fixed costs into variable costs and
break the dependency on scale. It’s a substantial shift in how we all do business.
But it’s not going to be easy.
Scale has been an issue in another sense
with any wholesale or industrial level
adoption of new technologies. Things
start out that look exciting, but can they
cope with the kind of throughput that the
securities services industry needs?
TZ: I think we need, as an industry, to look
more broadly at not just what potential
exists through IT or other enablers, but
also at what already exists in some markets. In this regard, I refer to the segregation of accounts at CSD-level down to
the final beneficial owner as is done, for
instance, in Scandinavia, India, or Turkey.
This provides the potential, in a second
step, to eliminate duplication, and therefore cost, in the overall value chain. Now
that’s a long way down the road, because
This industry is discussing, among other
things, a wide range of newer technologies
with varying degrees of promise for the
securities industry. What in your view
should be top of the agenda to address?
Thomas Zeeb: I think there are two elements to that question and technology is
the lesser of the two, to be honest. Let’s
take technology first: we’ve got to move
from talking to doing. We’ve got a lot of
experimental work going on, blockchain
being just one example. When I look at
Fin Techs and our own incubator, there’s a
lot of spaghetti being thrown against the
wall and it’s not at all clear what’s going
to stick. We need to get to the point where
there’s a little more starch in the spaghetti, so it sticks. What that means is that we
need to begin to see concrete applications
that bring demonstrable value to us and to
If, for example, you were equally enthusiastic about blockchain, big data, AI and APIs,
would you have a coherent direction?
TZ: I do think we’re entering a phase
where AI and robotics are a viable
alternative to near-shoring and that will
change the dynamics of how and where
our work is done quite substantially. It
gives us the opportunity to move beyond
the search for scale in the post-trade environment, if we can implement it properly
and the potential is realised.
Can you give me an example?
TZ: For 30 or 40 years, the primary
dynamic that has been shaping the
post-trade world is high fixed costs. You
therefore have to bring volume onto these
platforms, because that’s the only way to
get your unit costs down. The high fixed
costs are partially IT-related, since these
are not uncomplicated platforms, but
also include regulatory and compliance
overheads. There is a certain amount
of non-productive investment we need
to make just to be in the business. As a
result, there has been a 40-year quest to
generate volume. With an AI or robotics
Thomas Zeeb, CEO, SIX Securities Services, was the recipient
of Global Custodian’s Lifetime Achievement award earlier this
year. Here he speaks with Richard Schwartz about whether
the post-trade world can move beyond the search for scale.