Innovation and Trust Increase Appeal of Traditional Banks for Investors

For the world’s largest, most established banks, digitization is not a destination. Rather, it is an ongoing, dynamic process of change and innovation that must adapt to the latest technologies, customer needs and economic trends.

And while the digital transformation of retail banking may be focused on enhancing the customer experience via apps and online services, in the parallel world of corporate and investment banking, empowering clients with novel data services is equally important.

As Yvan Mirochnikoff, head of digital solutions at Societe Generale Securities Services (SGSS), told PYMNTS in a recent interview, digital transformation is a “cornerstone of our sales strategy” — a blueprint designed along two different axes, he said.

Much like in retail banking, the first vector of digital transformation is customer experience, where SGSS deploys digital tools and platforms to maintain client relationships in a connected economy.

“The second axis is access to data,” he added, explaining that the days of sending PDF documents via email are long gone. These days, he said clients prefer to have direct access to data so that they can incorporate it into their own systems.

As Mirochnikoff pointed out, whether information flows through an application programming interface (API) or by some other means, the general trend is for banks to create a “self-care environment” in which their clients can access real-time data directly.

In fact, “We are [increasingly] dealing with what we call self-care services, bringing more capacity to our clients to [service] themselves with more autonomy, and with more efficiency,” he said.

Growing Demand for ESG Data

Beyond the way that customers access the data that SGSS manages, the types of data they require are also evolving.

Mirochnikoff said that as businesses and fund managers look to diversify their investments into more sustainable assets, the need for environmental, social and governance (ESG) data has grown.

Sometimes this data is very structured, and therefore easy to gather and work with, he said. But often, it is unformatted and difficult to process.

To meet this challenge, he said that SGSS first has to build new models and share them with its clients. But it remains an ongoing process, he added, not least because of the evolving regulatory landscape that governs ESG investing.

In more general terms, creating products that give its clients access to new asset classes is central to SGSS’s development strategy. And to ensure that it is prepared to deliver new services as investment trends evolve, Mirochnikoff pointed to the bank’s adoption of a multiyear timeline for research and development.

Building Digital Trust

According to Mirochnikoff, more and more investors want to diversify into newer assets such as cryptocurrencies, and this will mean introducing these types of asset classes in a way that builds “a bridge between traditional finance and new finance,” he said.

Last September, for example, SGSS launched a new service for asset management companies wishing to incorporate cryptocurrencies into their portfolios, enabling the European bank to now act as custodian, valuator and liability manager for crypto-exposed funds.

In the end, Mirochnikoff said it all boils down to trust. While there are many ways investors can purchase and manage crypto assets today, they turn to established, regulated players like Societe Generale because “we bring this trust to the customer and to [their] investment management company.”

Moreover, in the wake of a tumultuous year for the crypto industry, culminating in the collapse of popular cryptocurrency exchange FTX last November, investors are looking for secure, trustworthy partners.

And while some European crypto exchanges are banking on low-risk custody solutions to attract weary users, Mirochnikoff insists that banks have a critical role to play in creating much-needed trust in the space.

“It’s very key that a traditional bank like us [is] paving the way [and unlocking] innovation [around] this new asset class with all the guarantees that it works and that it is secure,” he said.

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