Future-proofing technology in asset & wealth management
Manage tech debt to optimise scalable target operating models. How are leading firms approaching retiring legacy systems, adopting emerging tech, data management & governance whilst aligning controls & merging workflows? Franck BONTE, MD & CIO, Societe Generale Securities Services, explains.
Historically, the asset management industry has faced a crucial dilemma between managing an extensive but dated application portfolio, with the quest for greater operational efficiency, the willingness to leverage on new technology and explore new opportunities, and controlling IT costs.
The initial thought, maybe the simplest, was not to worry about technical debt, in order to protect clients, invest on a long-term vision or tackle necessary regulatory constraints, which are numerous in our industry.
But the world has changed, and the leading firms are facing new challenges which impact their vison on legacy systems:
1 - There is a strong need to improve the client experience, simplify access to data and, provide the foundations for new solutions using innovative technologies, such as Machine Learning, Generative AI and other robotics, to improve process management and increase automation rates.
2 – It is necessary to build modern applications based upon a more flexible environment, using Open source, Cloud services and web-based applications, easy to deploy and maintain, answering business needs with minor or substantial enhancements, managed via Agile methods, which are less costly and more efficient. Therefore, applications deployed over the last decade are much more adapted to our markets.
3 – We need to protect our clients against attacks and cybercrime. This requires greater attention by security teams and investment to increase the protection of systems and data, for asset servicers and the entire value chain, including client data as the most sensitive part of the ecosystem. The TEHTRIS report1 (Threat Intelligence) confirmed that, in 2023, companies are being attacked, but so are their clients.
Technical debt is thus becoming our Achille’s heel. Technical debt does not comply with the aforementioned requirements. It relates to back-end systems with no easy interaction with clients creating disruption into the global client experience. It requires longer time to market making the client suspicious about our transformation capacity. It requires massive maintenance effort to cope with the always higher risk of cyber-attacks, mobilizing experts on tricky developments. It forces us to create costly processes to reassure regulators about our capacity to deliver secured services. The volume of ageing applications remains a barrier for the transformation of our operating models and the search for cost efficiency and greater security.
To control our technical debt and effectively mobilize the significant investment that is required to transform legacy systems, it is necessary to manage the paradox of an immediate adjustment of our Information systems to be compliant with cyber risks, and a long-term transformation, to leverage on next-generation client services.
At Société Generale Securities Services, we are relentlessly protecting our clients against cyber-risks, by systematically updating the security aspects of our legacy Information Systems making our information systems healthy on one side. And on the other, we invest in SG Markets, Société Générale’s open-architecture digital platform, to offer our clients a wide range of solutions, powered by Artificial Intelligence and engine rules, allowing a customisation of the client experience, integrating legacy processes that have been digitized and modernized.
The added value generated by this transformation entails secured processes, regardless of their age, a reduction in the time spent to transform as the services are in a constant transformation (either due to security requirements or deeper transformation), capitalizing on the clients’ information that belong to the legacy applications.
Taking care of the legacy information systems is helping at every level in the organization to reconnect with client experience and create greater potential to improve our services, in particular clearing & settlement, custody and fund administration by leveraging again on legacy functional knowledge and expertise towards client experience.
Where do we stand today?
This constant transformation allows us to better control the aging of our information systems.
It also allows to capitalise on the historical knowledge of our clients’ needs, based on our systems, to better support them and transform this costly “inheritance” into valuable legacy.