For global custody network managers, analyzing the tsunami of data on dozens of local agent banks and markets to ensure the safety of client assets remains a sore spot.
And for now, the use of artificial intelligence remains an elusive ideal, say panelists and attendees at a recent global custody event in New York hosted by The Network Forum, a London-headquartered networking group for custody specialists worldwide. Instead, the drudgery of creating and sending local agent banks dozens if not hundreds of questions and manually reviewing all the answers is the accepted norm.
Does it have to be? Not if global custody network managers have their say. Yet no no one knows what it will take to push C-level management to make the necessary investment in artificial intelligence that could cut down on the manual oversight workload. “Due diligence and monitoring of local custodians is a cumbersome challenge and we don’t expect our banks to invest in any new technology to help out,” said a global custody network director, speaking with FinOps Report strictly on condition of anonymity.
The only solution offered by one panelist at a European-headquartered global custodian was for major accounting firms to certify subcustodians as legit. However, neither he nor other panelists could explain how that alternative would work considering that global custodians retain legal responsibility — and liability– for monitoring subcustodians.
Apparently, global custodians either haven’t figured out where to spend the money on implementing artificial intelligence for conducting due diligence on their local agent bank partners or whether the cost is worth the return. An impromptu survey of attendees at The Network Forum gathering showed that only 7% had considered using artificial intelligence in their due diligence process. When questioned by a panel moderator, none of the attendees was willing to confess taking any initiative.