Financial services enabler BNY aims to ride Asian growth

THE development of economies and markets around Asia is expected to help BNY grow in the region, given its role as an enabler for financial services.

The bank is focused on providing solutions that can help markets operate efficiently and give its clients access to markets, said Hani Kablawi, senior executive vice-president and head of international for BNY.

The Asian Development Bank expects the region to double its share of global gross domestic product to 52 per cent by 2050. And Kablawi believes the Asia growth story will create opportunities, given that BNY provides services across the developing cycle of countries.

“We grow with our clients,” Kablawi said. “Asian growth rates and economies have been growing faster, and so our Asian business has been growing faster as well – maybe off of a smaller base.”

BNY oversees around US$50 trillion in client assets globally, making it one of the largest custodian banks in the world.

While it is known for being a custodian bank, Kablawi noted that BNY also has capabilities in other areas – for example, it does clearing and collateral management, has wealth technology and payments solutions, and supports issuers of debt and equity.

In Asia, the bank’s worldwide network supports Asian investors when they enter global financial markets; and global clients when they invest into the region.

This makes BNY a “critical enabler” for cross-border capital flows, which is poised to benefit from rising transactions to and within Asia, said Chen Fangfang, head of Asia-Pacific at BNY.

Chen noted that intra-regional economic transactions and trade flows are increasing in the Asia-Pacific region.

Meanwhile, financial markets in South-east Asia continue to deepen and broaden. This makes institutional investors – its main clients in the region – increasingly significant, she said. “We’re seeing institutional investors become bigger and more sophisticated, and we’re working with them to support their investment and transformation,” Chen added.

She noted that governments in the region are supportive of new solutions aided by technology. In particular, Singapore is a “leading location” for innovation, she said, adding: “We want to tap that sort of vibrancy to experiment and innovate, to build up the experience from a cross-border real-time payment standpoint.”

Chen noted that technology and innovation are “very much part of our solution and platform” to become a market enabler.

Globally, BNY invests more than US$3 billion into tech and innovation. For Asia, it leverages its global capabilities to tailor for local needs, she said.

As the global environment is becoming more complex, there is a need for an operating model that is scalable, agile and can provide real-time data insight for investment management. Chen added: “We clearly see the rise of digitalisation from our client base in Asia, in terms of automating processes, driving integration of systems and removing manual processes to reduce errors.”

Clients are also increasingly focused on data, resulting in frequent deep-dive conversations about investment, operation models and transformation with the bank, she said.

This trend generates demand for data management capabilities, integration of investment insight analytics, and would also need machine learning and talent – which would touch on multiple BNY business lines, she added.

Complement, not compete

Kablawi said a key reason behind BNY’s success is that it does not compete with its clients, but rather complements them.

He noted that BNY is both the largest custodian in the world and the largest collateral agent in the world. This allows it to create a collateral management, liquidity and financing platform connecting its extensive network of buy side and sell side clients.

“(Most trust banks) are buy side only, while the universal banks are competing against their clients,” he said.

In Asia, Chen noted that instead of competing with wealth managers or private banks, BNY provides solutions to satisfy their client needs.

This includes its outsourced chief investment officer solution, which it can provide to mid-tier wealth managers “so they don’t have to hire an army to develop investment products”, she said.

Chen added that the bank is operational “regardless of the market”. Even with climate risks, or US-China tensions, the bank still provides capabilities to support market movements.

“We’re there to service our clients where trade flows into South-east Asia are increasing. This may change in 20 years, but we’re still there to service them,” she said.

Chen noted that the Asia market as a whole is fragmented, given that the region is made up of different countries and markets that are in different stages of development.

However, she expects this to provide multiple opportunities as the bank is able to provide solutions across a spectrum.

“There’s still opportunity for markets in the region to deepen further and be more sophisticated, which will drive more investments and more vibrancy of the capital markets in Asia,” she said.