Northern Trust: Improving transparency across the asset servicing market

Northern Trust won three categories in the 2023 American Financial Technology Awards: Best mobile strategy initiative, Best data management initiative and Best reporting initiative. Paul d’Ouville, global head of technology solutions and servicing at Northern Trust, discusses his firm’s fourth consecutive win in the Best reporting initiative category.

Northern Trust Service Governance Reporting was responsible for delivering this win. What problems was it designed to address and what types of firms typically use the platform?

Paul d’Ouville: Philosophically, asset servicers play a role in providing clients with specialized outsourced services across custodial functions, investment operations, and fund administration and accounting. When you’re a provider of outsourced services, clients want the ability to oversee, govern and have transparency in the operational processes you provide to show you’re performing the job well. Partly for day-to-day interactions in support of operational efficiency, but also to use with regulators or other constituents, demonstrating there is sound vendor management and oversight of the organization they’ve hired and trust to provide those services.

How does Northern Trust Service Governance Reporting address the challenges to which you’ve referred? What does it bring to the market that makes it such a compelling proposition for clients?  

Paul d’Ouville: The suite of dashboards within the platform was developed using a microservices architecture that provides a granular level of code, allowing us to deploy capabilities faster by using a continuous integration and delivery pipeline with a reactive interface, which can render on mobile devices, tablets or a desktop platform. Our institutional investors who use this can access this information to receive event statuses throughout the day, ensuring, for example, that trade settlements occur as expected. Alternatively, they can view key performance indicators over time to ensure there is consistency of performance by Northern Trust for those services.

A good analogy is the Uber app, where you request a car and have the confidence it will arrive because you can see it moving on the app. One of the capabilities in the suite is our settlement monitor—a component of the entire set of capabilities—which provides clients with transparency into the data and information related to potential settlement issues. With the Central Securities Depositories Regulation, where there are penalties for late settlement, there is a focus on ensuring settlements occur as expected. Thus, being able to efficiently monitor and act on this information is increasingly important for our clients.

Regarding the upcoming move to T+1, or next-day settlement of large numbers of securities transactions executed across the North American capital markets, what technical queries have you been receiving from institutional investors and other organizations in need of support?

Paul d’Ouville: Depending on the role Northern Trust plays with those clients, we’ve had a lot of active engagement from clients’ front and middle offices. A typical use-case is an asset manager in Europe that might not have a trading desk in North America and is looking for a way to address all the trade activity that occurs outside of European working hours. So, things along those lines, as well as the information flow that these dashboards and our operational processes provide back to the front office. There is a lot of client engagement in terms of preparation and I’m sure that, as we move towards the May 2024 deadline, the number of discussions will continue to grow.

The key here is transparency. People want to know that whatever is supposed to be done, is going to get done, so they can comply with industry regulations.

Paul d’Ouville: Yes, 100%. That’s where we’ve been headed on this journey over the past couple of years—to provide operational transparency and make it visually apparent to customers, to engender confidence and trust in what we’re doing. Again, much like the Uber experience, you have a good sense the car is going to show up because you can see it around the corner on the app. Similarly, if you go to a restaurant and you sit at the chef’s table in the kitchen, you see how the meals are prepared and you have confidence that it’s going to be a great meal. Transparency is what brings this to life in our space as an asset servicer.

Is there anything you’re especially excited about with new technology and functionality within the platform over the next 12 months? 

Paul d’Ouville: We’re extending how we’re going to deliver some of the information from the settlement monitor components, through different delivery mechanisms that our clients want—not just interactive dashboards, but they also want to be able to store it for retention purposes—and expanding the content sets it addresses. In the longer term, we will also create a more frictionless experience with regard to document exchange, where clients and partners can create, edit and collaborate on documents for a variety of reasons in the asset servicing space. This provides transparency and the same experience through the workflow, so people know at any given time what state something is in, without having to pick up the phone and track down a person—they can just look at its status. We will also extend the concepts into the initial rollout of our fund transparency and oversight dashboards, so we can extend the concepts to other service domains within the asset servicing space. 

 

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