Hani Kablawi: Investment services set for growth

Hani Kablawi: Investment services set for growth

 

Hani Kablawi is the first head of investment services EMEA for BNY Mellon to be purely focused on the role, as previous incumbents divided their time with the EMEA chairperson position. The structural shift reflects the growing importance of investment services, already the company’s largest business. His remit is to further bring together buy-side and sell-side solutions across asset servicing, alternative investment services, corporate trust services, broker-dealer services, depositary receipts and treasury services.

Kablawi co-chairs the company’s sovereign advisory board and the Middle East and Africa management committee. He plays an active role in both mentoring and reverse-mentoring at BNY Mellon. He joined BNY Mellon in 1997 and has held a number of business and risk management roles based in New York, Abu Dhabi, Dubai and London. He holds a Masters in Finance and a Bachelor of Business Administration in Finance, both from The University of Iowa. 

 Is the phase strategy being dominated by regulation now over?

The past few years have been very focused on optimising our business and meeting regulatory obligations – not only our own compliance but for clients, from AIFMD to Ucits V and now Mifid II.

 We have invested heavily in resilience and resolvability, consolidation and optimising. But there is a pivot here, absolutely. There is no question that having delivered on those aspects we are now very focused on digitisation and growth.

Regulation has not completely fallen away but in terms of the share of time, mind and wallet the focus has shifted.

Where do you see opportunities?

We are bullish on EMEA. We think there are growth opportunities in these markets if you appropriately track the flow of assets and investments.

Operational efficiency and data mobilisation are important and there are flows to passive and ETFs, alternative investments, real estate as well as debt and credit funds. And, pension funds’ assets are growing.

We always test ideas with our client advisory boards before investing our money in new products and services.

You took up your position two days before the Brexit vote. Has it presented more costs or opportunities for your business?

Brexit will not be good for economies over the next five years.

The total amount of available business can be expected to shrink as a result of Brexit – that is an easy prediction. But even in the worst case scenario there would only be very little change on the margin for our business, such as moving clearing or treasury resources to one place or another. We run three systemically important financial institutions in EMEA.

It’s a significant undertaking for a bank or asset manager needing to set up significant operations in the EU – getting the real estate, staff, capital, treasury functions, systems, technology and permissions to operate in place before even starting to create the business generating machinery.

The question is – what will they do? And, does that through up opportunities for those up and running?

What are your clients asking for? It depends on how much they rely on a passport. UK and US investment managers that have been passporting into Europe from the UK are assessing what they might need if the passport was not part of a hard Brexit deal.

It is a fair assumption that they would stay in London and open an office within the EU – in which case they would be looking for turnkey-type solutions that give them continuity.

How do you envisage the future of the City of London?

London is in the position it’s in for many reasons. Easy access is one of them, but there are many others. There is a significant accounting, finance, consultancy, legal, advisory ecosystem here, as well as fintech at a time of growth in technology and digital strategies.

Brexit is bad all else being equal – but all other things are not equal. Over any period change happens anyway, people will innovate and find solutions. Headcount may move away – but equally it may be replaced by something else. The power and attraction of London extends well beyond the continuity of the passport.

How have you structuring the business to pick up on emerging trends? Historically, we had run the businesses within BNY Mellon as verticals. There are a lot of advantages to that but you also need to be conscious of introducing the horizontals of revenue, cost, controls and risk synergies. That is what I am trying to do in this role.

What does that mean in practice?

Each business has a very good feel for the themes and strategies playing out in their own market – it is about bringing a broader perspective.

Our client advisory boards confirm that in the short to medium-term there is a drive towards passive and alternative products. As a result our asset servicing business has a very deliberate strategy to build out administration for those asset classes.

A good example of how a strategy plays out within our business is real estate administration. It’s a space that is growing and there is a trend within it for outsources administration services. We acquired a business 18 months ago then integrated and re-platformed it into something scalable and leveragable before starting to offer it to third-party clients.

Likewise, the continuing trend for the deleveraging of banks, with banks packaging loans into debt funds as well as funds originating loans, has led to us offering end-to-end services for those investment funds.

Investment managers are a significant part of our client base so we are very, very interested in their thoughts around margin pressures.

How can asset managers maintain revenue in such a competitive environment?

We have long been a demand aggregator and product developer. To this we have added a platform layer, which houses our own products as well as those of fintechs. It means clients can access capabilities without giving those companies its data, such as measuring their carbon footprint or sentiment analysis . That is the crux of our technology strategy.

The problem with big data is that it is so big. What do you actually want to look at? It needs to be delivered at the right time, be relevant and actionable. It’s about operationalising data and consuming it effectively.

There is an ever-expanding universe of fintech products. What types of app are gaining most traction with asset managers and other clients?

It’s still early days. We have traditionally been good at middle and back office services – so clients look to us for operational efficiencies and actionable data. For example, an asset owner could monitor trading patterns of all its asset managers in real time and identify unusually large trading volumes – and then call up the manager to ask why.

Economic value information such as securities lending revenue and exposures is considered to be valuable, as is middle office information such as credit, collateral and reinvestment exposure. And, we are also getting much better at providing front-end tools.     

 

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