RBC Investor & Treasury Services has adopted a three–pronged strategy targeting small and medium-sized clients, transfer agency and alternative investments underpinned by a fresh approach to technology.
Francis Jackson, head of global client coverage at RBC Investor & Treasury Services, said the custody arm of the Canadian banking giant has in recent years been evaluating where the firm is strong compared to its rivals and what are its key growth opportunities.
Jackson, who joined RBC from JP Morgan in May 2015, said he spoke to the bank’s top clients and devised from there the three-pronged approach.
Jackson told Global Investor: “Firstly, from a traditional custody and fund administration perspective, medium-sized asset managers still value a high-touch service. It is true that some of the larger asset servicing providers have decided to focus on the biggest clients and are no longer servicing this segment. These managers know that RBC is interested in their business and will supply them with a high-touch service at a competitive price.”
Jackson said he thinks the buy-side middle office will be an area where clients will need support and he sees this as a big opportunity for RBC.
He continued: “Secondly, we currently have 30% of the European transfer agency business and work with the big distribution powerhouses. As one of the largest providers in this space, we are very good at it and this will be a big differentiator for us.
“The third element is the real estate and private equity investment sector where we have a strong business in Luxembourg, France and the Channel Islands. We are looking to grow that business significantly.”
Jackson believes RBC was always strong in these areas, rather it was a question of “formalising a strategy around them”.
As well as focusing on these three areas, the bank has also committed to invest in the technology platforms that support these offerings.
Jackson said: “We decided that our technology and data offering required investment. We started on a multi-year firm-wide technology programme called the Advanced Client Experience.”
“We are now 18 months into the three year programme which involved us building technology in a new way. We took the agile approach and brought in a team who enabled us to go from nothing to code in as little as 20 weeks. From a standing start, we had over two thousand users on the new platform in less than 15 months.”
Jackson said his mid-sized fund management clients told him that one of their biggest challenges was leveraging the data they had in their back offices, which has presented an opportunity for RBC.
He said: “On the data side, we have leveraged our global data infrastructure and introduced a bank-wide data lake. At RBC we have reams and reams of data related to all areas of our clients’ business.”
Jackson continued: “We started with board reporting and settlement, but we are also really focused on how we can help our clients make better investment decisions.
“We are in the process of data ingestion. Our custody and accounting services have huge volumes of data while our transfer agency business also has a rich data set. One area we are looking at is managing counterparty risk for example. We have masses of data on how different brokers perform under different conditions and this could be hugely valuable to our clients. We are also looking at helping our clients to make better investment decisions and distribute their funds more effectively,” he added.
Jackson said: “We are still working through a number of proofs of concept with our clients but we are not far off formally announcing our data strategy.”
He said RBC is looking to go further with technology and is looking at techniques such as Robotic Process Automation, which will “make us significantly more efficient, reduce risk and allow us to focus on higher value activities for our clients”.
Jackson said he sees technology changing the face of the custody business: “Custodians have taken away lots of manual processes and helped manage inefficiencies in the market but I think new technology will enable a step change. At some point clients will only pay for value-added services.”
He concluded: “The industry has to evolve and start thinking more about the customer and their biggest problems which need solving. Firms need to migrate from being custody/ administration specialists to providers of services to asset managers.”