The wishes of investors keen to avoid settlement failure penalties and cookie-cutter services from their custodian banks are set to be granted by artificial intelligence (AI) solutions, according to Deutsche Bank’s new whitepaper, “Unleashing the potential of AI in securities services”.
The paper explores how AI is being used in post-trade securities services and custody and provides an introduction to AI in the field, including a rundown of use case examples, insight into key algorithms, important governance considerations and a series of key recommendations to ensure best practice is followed.
Tapping this transformative potential of AI, however, requires careful thought and preparation.
“As more and more companies look to deploy advanced AI solutions, good governance and effective controls will play an increasingly important role in its growth,” explains Boon-Hiong Chan, Global Head, Securities Market Development & Technology Advocacy, Deutsche Bank Securities Services. “Proactively identifying use cases and addressing contextual issues - and working collaboratively to address them including having real time data - will be a key part of any push forward for the industry. Our Guide aims to help raise industry awareness of some of these considerations and as well foster an understanding of how AI technology can be used in new value creation.”
While the possible applications for AI technology are yet to be fully explored, a number of compelling use cases have already emerged. The paper explores how AI-driven client segmentation is being applied to help custodians better understand their clients and develop products and services tailored to the shared needs of specific segments, as well as how AI is being used to proactively detect and prevent settlement failures.
“There is a lot of buzz around AI within our industry, but it is a difficult landscape to navigate - and one that lacks a clear direction,” says Marcus Storm, Head of AI Products, Product Management, Deutsche Bank Securities Services. “In this paper, we lay out four key recommendations for those looking to invest in this emerging technology: foster a focused AI agenda at the industry level, source and embed the right expertise, clarify auditing requirements and, crucially, bring all of this together to ensure you have the complete package needed to succeed.”