The wishes of investors looking to not having to deal with settlement failure penalties and cookie-cutter services from custodian banks will be fulfilled by AI-powered solutions, according to a new paper from Deutsche Bank (ETR: DBK), titled “Unleashing the potential of AI in securities services.”
The paper from Deutsche Bank looks into how artificial intelligence is used in post-trade securities services and custody and offers somewhat of an introduction to AI in the field. The paper includes a summary of use-case/examples or scenarios, key insights into algorithms, governance considerations and recommendations to ensure best practice is being followed.
According to the paper, we need to be adequately prepared and have a carefully planned roadmap if we want to leverage the transformative potential of AI.
Boon-Hiong Chan, Global Head, Securities Market Development & Technology Advocacy, Deutsche Bank Securities Services, stated:
“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. 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.”
Although the potential applications or use-cases for AI tech haven’t been thoroughly explored, a number of possible use-cases have emerged. The paper from Deutsche looks at how AI-powered client segmentation has been applied to assist custodians with better understanding their customers and create products and services customized to the requirements of certain market segments, as well as how AI is used to identify and prevent settlement failures.
Marcus Storm, Head of AI Products, Product Management, Deutsche Bank Securities Services, remarked:
“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. 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.”