JD Singh (Moderator) 0:03
Welcome, everyone, to today's second S&P Global market discussion about hope everyone is finding discussions interesting thus far, some really interesting observations, I think you will have found some of the themes that actually Judy mentioned in her keynote update regarding corporate actions, volumes, increasing corporate action becoming more complex, all of these kind of topics we're looking to hopefully cover in our power discussion. But I think, you know, as we think about corporate actions, I think we talked about operational risk, financial risk, and ultimately, reputational risk, these issues still keep us up at night, right. So we still have not really found the key solution to these problems. There are many solutions out there, I think many firms are doing what they can. And hopefully today's panel discussion, you'll hear some great input from some key folks that really are at the forefront of trying to make some of these changes and tackle some of these issues. Everyone is looking for key solutions across corporate action data and enterprise software, and to continue to keep these issues at bay, right, so that we can have a good night's sleep and not worry about that fire that may start that may cause these diffuse issues issue for us. Anyway, I'm really pleased, right, so let's begin with the power scatter, really pleased to be joined by Judy Lee, who in her everyone knows, but her day job really is a global head of asset servicing and Morgan Stanley, Lukas Wang, the CO head of the EMEA prime micro trading at Goldman Sachs and medical revenue, who heads up data strategy and operations for corporate actions and S&P Global market. So with that, why don't we begin with the first question, and really, we're going to focus around financial institutions, banks, asset managers, they're facing this need to stay competitive, reduce fixed costs, and have the ability to scale Quicker, quicker than ever before, new, the challenges are just become much more the forefront. So Julie, just starting with you, what do you believe are the core competencies that investment firms are focusing on at this moment in time?

Julie Leigh Speaker 2:16
So I would say, you know, JD, from from my perspective, obviously touched on the fact that we need to be scalable, it's absolutely critical that we can be scalable, and, and actually come to the forefront even more. So over the last sort of 18 months, 24 months, just due to the the size of the volume growth that we've seen in the markets. I would say that there's there's a couple, of course things out there that we're focused on. So clearly, whatever we do, there's always a cost element. And we need to be mindful, of course. But I would say that actually, you know, cost isn't the key priority, that is an other market time. So actually, at the moment, for us, it's it's much more about that ability to grow that ability to be scalable. It's about the quality of the service that we offer, and how we differentiate ourselves as well. And, you know, I think I touched on earlier this morning about the fact that clients so, you know, much more acutely aware now of what they expect to get, especially from a corporate actions perspective. But the other big thing, you know, in terms of what we're focused on, its its its compliance, its regulation, its control. And, you know, with all the changes that are out there, and the need for us to continually be able to adapt to be in compliance with those changes. That's a huge area to focus. Because when you look at infrastructure, technology, infrastructure, and the need to change that it's not changing one system, right is changing multiple systems. And that can be complicated that can be timely. You know, I think, one of the sessions earlier, we're talking about legacy technology and the fact that we don't want to tinker with some of these legacy systems. And that's absolutely the case as well, right. So as we look at how do we solution eyes, how do we move forward? Actually, it's, you know, it's not a desire to go in and tinker with legacy, it's about how do we move things forward onto a platform that allows us to be much more nimble and scalable, but as I say, it's the balance of all that versus cost, right. So costs will always be important, but we've got so many other things that will need to be focused on that it's not number one for us.

JD Singh 4:36
Great, thank you for that. Julie. Lucas, your thoughts on this?

Lukas Wong 4:40
Yeah, sure. So I think I would echo everything that Julie sort of said. As already mentioned, I'd say you know, ultimately, on you know, on the sell side for banks, I think how we serve as our clients is always front of mind. So, again, you know, it's we've seen definitely a scale up in kind of what clients are asking for The complexity of the the asks the bespoke nature? How do you handle different solutions when you're ultimately working with, again, tech that is probably often outdated and not really fit for purpose for plugging in various different asks. So I'd say I completely agree no, like probably cost is not in this current environment where we're in sort of an, I would arguably say within growth mode. I don't think that's necessarily front of mind, I think definitely client experiences. And no, as many for bank sell side client acquisition is business, right. And I think we're in a, an acquiring phase of the cycle, maybe somewhat a consolidation phase across the prime space, I think, obviously, has been a few headlines around, you know, what's happened in the prime space in the past year, there's definitely a theme of sort of consolidations, a few of the large American banks, I would say, is a common theme. And that that relies on then, you know, as you acquire more clients, and also, I think those are the type of clients. So, you know, we're seeing, again, a growth area of sort of clients and maybe have different pods of people looking at the same things. And even with one client, you can have different ways of approaching things for certain teams internally. So I think, you know, that's definitely front of mind is how do we provide client solutions that are often very different? And then I'd say, I guess the other important thing for us, and I guess, investment management firms is obviously the risk that comes with corporate actions, financial risk, I think, is becoming increasingly more complex. So there is just with volume of corporate actions, there's actually more risk in the system. There's just yesterday, you know, on an absolute basis, even if your percentage of errors remains the same, that the value of those goes up with the volume. But then on top of that, there's actually more complex, we're seeing more complex corporate actions being launched by companies. I think they're like, having data driven solutions, you know, one is getting that data quickest. Then interpreting it in a in a smart way, I think is kind of the next phase of from a risk perspective, how we start to think about at our corporate actions.

JD Singh 7:13
You know, some great points. Thank you, Lukas. Madhu, you what's your view on this? We're looking at it from a slightly different perspective, obviously, working with customers, right from the S&P Global side. Your thoughts on this?

Madhu Ramu 7:26
Yeah, I think Julie and Lukas covered a lot of relevant points, I think a few things that I would add that we are hearing from our clients that they are focusing on now is really about removing these data silos, right, that I've allowed to proliferate across, you know, forms for a long time to ensure that valuable information flows freely across the enterprise. They're also trying to evolve the operating model in harmony with the delivery of new capabilities, because the transparency that they acquire between front to back back office doesn't always exist, like, are you thinking about a new strategy around, okay, China, Brazil, of funds or buyback strategy, you don't have a lot of firms that are geared to, you know, have their operations team support that. So often, you'll find that, you know, the operations teams are not set up in a way where they understand how these new products can be efficiently supported. So trying to be more agile in that space is definitely something that, um, we hear a lot from our clients. Obviously, access to timely accurate information will always be on top of the priority. But But forms are really trying to look at that entire story in one single place. Right? So it's not just about corporate actions, like No, how does that impact reference data or index admin like, so trying to bundle all of that in one single place? Is is another request that we often get. But yeah, I think in addition to what Lucas mentioned around prime we can we are also trying to we also, you know, here, the convergence between asset and wealth management, right. So trying to see how asset managers are trying to sell the retail space without a lot of intermediation. So, I think yeah, these are, these are definitely some of the top priorities that we hear from our clients.

JD Singh 9:15
I guess with this continued shifting of focus to these core competencies, how critical is modernization of the of the core asset servicing function? And I know we have different names, but particularly on corporate actions. Right. So Julie, start with you on that question.

Julie Leigh 9:35
So, I would say it's critical as my sort of fundamental response to that, right. I think all of the different points there Matsumae. Lucas made, you know, as for us to achieve a fitness thing that we need to achieve when we look at these core competencies maybe as a focus, we need to have more modernized technology to do that. So otherwise, it becomes hugely, hugely difficult for us to stay compliant, exceed client expectations, manage the risk that we have, you know, historically an asset service center, it's been manual, and it's been labor intensive. And it's been relying on, you know, deep subject matter experts. And we're moving away from that, though, we just cannot, cannot continue to operate in that way, and delivered everything that we need to deliver. So modernization needs to be at the top of everyone's agenda.

JD Singh 10:40
And Lukas, I'm assuming you must have the same sort of same sentiments as Julie, regarding modernization?

Lukas Wong 10:48
Yeah, definitely. I guess, like, I mean, I think we now live in a world where the ability to interpret data, the quickest, the smartest, is definitely like, it's a theme that happens not just across finance, right. And we see that everywhere. I go, what, what God says is that, you know, the space of Corrections has typically been labor intensive, has required on a knowledge base that's, you know, maintained often between investment professionals, and, you know, or traders, and then all the way back into asset servicing. And I think now, what is clear is that, you know, in order to understand what is happening, given the volumes, and the ability of, you know, the amount of data that underlies it, what really, the modernization that is required is, in my view, systems that alert you as to what is the most important thing that you need to be looking at for, you know, from a risk perspective, and then simply in terms of handling, you know, client experience all the way through processing corrections, and anywhere in any firm is, you know, again, it's a data driven exercise.

JD Singh 11:50
And I guess my next question, which I'm going to have to Julie and Madhu, for their thoughts on, I mean before I ask the question, I get my personal thoughts on this. And this is, you know, personalizing, dealing with customers every day, is the opposite of what I'm going to ask. But I want to get, obviously, Madhu and Julie’s thoughts on this, which is, I believe, during this pandemic, and post, what we've seen from customers is a huge appetite. So things that were on the roadmap for three or four years down the road to get to, has turned into they must either must do it now or within 12 months or 18 months. So we've seen a huge uptick in terms of customer interaction around modernization about, you know, getting more technology to operations teams, because now we don't know what the next time they need to work from home or remotely is going to be. So those are my thoughts, those are sentiments I get when I talk to customers each and every day, which is we want to we want to do this modernization program, we need to do it. And it was scheduled to be done in 2023. But now we want to move to 2022 or 2021, as a lot of the conversations have been. But Julie, what is your I'm assuming your you must agree with that. Right? These things haven’t really been taking a backseat with operations working from home. If anything, it's only helped speed that up?

Julie Leigh 13:03
Yeah, absolutely. Right. So I think, I think a few points there, I think one, as you quite rightly mention the fact that we had to move to work from home in fairly short order, and make that the things that we took for granted on a day to day basis from longer their vote. So you know, the ability to be on the ground with teams to oversee what people were doing to listen into conversations, to train and on board, individuals coming into the firm, we very quickly had to pivot towards finding other ways to do that. And in an environment where there is a lot of manual processing, and you do need a lot of supervision, and you do need a lot of control. That was difficult, right? So things that, you know, maybe would have been seen as a nice to have before it actually became critical. So having real time data and real time, dashboards, ability to see your risk without having to rely on someone to escalate something to you. And also training. So again, you know, we sort of touched on the fact that we've got legacy platforms, I think most organizations have probably multiple platforms that the process and call to actions are crossroad. And a again, you know, when it comes to channeling that makes that more difficult and makes it difficult to one when you're looking at a legacy platform to actually train people to use it. So sometimes you've got people who've been in the space for a long, long time, who know those systems. But as volumes go up and you brand new hires in, it's not as easy to do that when they're not on the ground. The other thing is fungibility. So when you're working across so many different platforms, and then you've got growth. So you know through the pandemics for example, we seen dividends getting cancelled. So actually, we don't have that spike in usual seasonal volume, but it wasn't quite as easy to then just pull resources off that and put them on to something else because actually, if you've got different platforms and different systems and it's not as easy to do So I think for me, you know, just looking at basic clean and reducing KPS, and dependency controls and provision, then all of that right away, came to the forefront. But the other thing that came to the forefront as everything that, you know, we've been looking to do for years, whether it's by improving the client interaction, whether it's about de risking some of these processes, you know, whether it's making sure that we've got systems that are more flexible, more agile, more scalable, all of that, not only was then important for us, but it came important across the organization, right. So they, there was real front to back coordination that happened across a lot of the big banks, where the traders were acutely aware of the fact that there was an increase in volume, there was an increase in complexity. And actually, we had to partner through that. And I think that when the front office get more visibility into some of these platforms that corporate actions are processed on, then there's much more support behind pushing forward some of these automation agendas as well. So I think all of that goes back to your question, which is did it take a backseat? Actually, did we think it expedited it, I think expedited it?

JD Singh 16:16
Yeah. No, I couldn't agree more. And Madhu, I think you know, very similar thoughts I'm sure from you, considering, you know, you have 130 people today, across what eight, nine different locations around the world, in office line, in office speak right at that those were the offices, we had nine offices around the world 130 People now you have all these folks sitting in different home offices. Your thoughts on this?

JD Singh 18:17
You know, I couldn't agree more. It's almost like being in a in a room at an event, rather than doing a zoom or a WebEx right. So yeah, no, I agree. I think technology has come a long way. I think everyone has agreed as in, you know, firms are fully engaged in the implementation programs haven't stopped. So we used to do large scale on site implementations. We're not doing them virtually right. We have folks around the world, our customers are based around the world. And that work, and that process is continuing to be done. And we found a way through it. And I think, you know, now it's really about setting up for what we don't know in the future. Right. So I think the pandemic has shown people that we are we do have resilience amongst teams across Technology Operations, but really, it's not. And I think I think you have to be quite honest, most folks go through it. Well, because even though they didn't expect this, they kind of found a way around it. But I think now it's more about how do we just be more efficient right during this process? I think so. A lot of that leads to that. I think many services in a corporate actions operation technology is not a new trend right? We we've heard about it for four decades, as a corporate actions right and Corporation has been a long, many, many years before many of us and will be here long after us and yet lot hasn't changed. It's relatively common to see large financial institutions outsource part of their asset servicing functions, like custody and fund administration. However, straight through processing automation in asset servicing Ops is still a massive challenge. Due to again disparate systems, multiple interfaces from vendors, brokers, custodians, and many third party systems. This has clearly been a challenge for years. From a technical point of view. I'll start with Lukas, what is the need of the hour to support the core competencies we've just spoken about?

Lukas Wong 20:09
Yeah. It's a very important question. I think it kind of goes back to all the themes that we've kind of touched upon. And, you know, I think what particularly the pandemic has highlighted is that, I guess we have been through a period of seeing things that no one had ever really seen before in space, and then trying to test our systems as to where they could handle them. So I think, Julie touched on obviously, you know, last year, when we saw a wave of dividend cancellations, which, on the theme, that sounds like a pretty simple thing, you actually should have called for action relief in that you don't need to process anything. You know, I would be surprised if other funds didn't struggle with this as well, you know, it's not something that typically we would design our system for, for example, it's just not something you really expect to happen. Right? So I think the, in my view, the core competency now from here on in is how do you work? Like one? How do you design systems that are genuinely fully front to back? And that I think goes, you know, for banks and investment firms, I think that's all the way from sort of the risk management desks that front office all the way to reference data, the actual pricing, it's genuine front to back in the space? And then how do you thoughtfully partner with technology team? So you know, I'm not an engineer, I'm not a coder. But you know, we have geniuses in the space? How do we explain to them that we need to design systems that are basically future proof and can be turned around on the spot for, you know, for examples where you have something that you didn't think would ever happen? You need to then be able to say, right, we don't we were in a scenario where you said, okay, you don't want to, you know, touch and think with a secondary tech, but ultimately, we don't have a choice, right. So that for me, I think is like the, the core competency there, I guess, is probably trying to future proof technology, which I think is, you know, by no means an easy task. I think then from just from more on, you know, my personal angle, because of the seat that I sit in, I think what's becoming ever more important is how do we actually generate that tech and plug it into front office systems as well, I think it I wonder whether firms are doing it, you know, have had to review that before until this year, I think it's probably not front of mind for everyone is understanding. As I get a wave of different cancellations, how can I be alerted in the quickest? You know, typically, I would say people rely on external news vendor sources, and it will probably be a front office, email to middle office saying, Hey, by the way these events have happened, that's fine if you have one or two. But if you have, you know, 50, that data should actually be coming the other way around, right? And saying, can we be using our vendors better and plugging that into our system to allow our front office teams? So I think, yeah, that hopefully has sort of gone towards answering a question, but I think it's, you know, it's definitely a non-trivial one. And, for me, it's all about future proofing legacy systems to make them more agile.

JD Singh 23:05
Yeah. And some great points there. Lukas, I can tell you one thing for sure. This whole cancel dividend conversation. Yeah, no one saw that coming, right? Because we tracked over 90% of the matter will have the exact numbers 90%, year over year canceled dividends, and the number of customers that raised that to us. And yeah, we obviously were capturing that information. But we will, I got to say I was very surprised by the lack of not so much the customers because they did not notice that happening. But even the other participants in the market who are meant to be providing this service to customers, right, the data providers, for example, the the fact they didn't know matters, that 93 94% year over year, canceled dividends, so huge impact to customers, because like yourself, mentioned, right, people are scrambling and that conversation came up many, many times. Madhu your thoughts on this?

Madhu Ramu 23:59
Yeah, I think, you know, like, like Julie mentioned earlier, like I, you know, forums are always looking to launch new products quickly and most cost effectively, right. And they want to understand the root causes of work issues, forecast and plant capacity, increase operational automation and efficiency. So I think goes back to some of the points that we discussed earlier, like, you know, it's really about breaking down those data silos, like, you know, you probably need things like a common announcement capture utility, where you get consistent data across the phone, but it's customized for wealth management, asset management TV, like, you know, each one has different needs, but you know, at least the source of the data should be same but customize across from and, again, I'll mention automation, but I won't just, you know, pick up you know, big words like AI and ML because a lot of them still have to be tested in the production world. I still wouldn't trust the system making a decision based on last 10,000 events because with cooperation, everyone is so unique. It's not about getting 99 Right? It's you know, not getting that one too. So, you know, you really need to pay a lot of potential in this space. So I think there's no big silver bullet that where, you know, you fix one or two things, it's it's going to give you all the benefits, it's a lot of, or a series of small changes that you'll have to make using automation and Opie, because each event type, each market is different. So I think if, you know, we can focus more on automation analytics, that is looking around timeliness reporting, risk management, creating that better transparency between front and back, I think I think that will be beneficial. And I think to Lukas’s point like, most of the tech is, you know, outsource our forms are going to be using a third-party software, right? So it's, it's really key that, you know, you choose providers who have an agility mindset, I mean, whether from an asset servicing data operations or platform perspective, you want partners who understand how quickly they will need to pivot, and who have the infrastructure to sort of continue to deliver those high quality capabilities in this environment. So also, you know, having those strategic partners will help because they can co-develop the product roadmaps with the client to ensure you know, close alignment with the strategies.

JD Singh 26:19
Yeah, no that's some very valued points. Julie I’m going to switch gears to you on this continued theme. Right. So as we, you know, we push towards innovation, such as SaaS and cloud based technology, right. For those, you know, again, phrases we've heard for many, many years, what the core areas within asset servicing where you have witnessed significant shift in this aspect, in your view.

Julie Leigh 26:47
So, I would say that I think I've seen a lot or large organizations, I suppose, successfully embrace and implement SAS solutions, that adopter sort of cloud for strategy right as the Think how the retirement for new systems. But I think that we're still not quite there yet, but because my experience is that, you know, we've gone down that route, but actually, I don't think even those organizations are necessarily getting the full value of these solutions. And I think part of it comes back to me, you're looking at your transformation strategy, is that, you know, it's not just about taking a legacy solution and moving it to cloud, right, which I think is it times people sort of foster view, which is, Oh, that's great, let's, let's move there straight, let's move it. And he'd and, you know, we've got this great solution, when actually, we need to really think differently. And I think that ties into your last question as well, which is, you know, we put the pandemic shoulders that how things have been done, is not necessarily how they need to be done in future. So taking what you've done before, and just putting it into a cloud is not going to give you the benefits that you you really could get from that. So, you know, when we look at some of these legacy systems, and some of the complexity around some of the processes, and the infrastructure and the architecture, get just putting that into another environment. So I have seen benefits, but I think that the full value, as I see is, is yet to come. I think that we do need to really take a step back. And, you know, what I always say to my teams is we need to really think blue sky, right? So we need to be thinking about what could this look like, you know, what are the things that actually if this, you know, if we could design this from scratch that would allow us to do we need to be thinking about that, and then leveraging cloud and then leveraging SAS, rather than just time to share, we've already got into that type of solution. And I think that's what we'll start to see some of the true benefits of those solutions coming through.

JD Singh 29:11
You know, and I couldn't agree with you more, if you can't take something that's 80% there and putting the cloud in it and assume that, you know, it's 100% Now, you know, fit for purpose. Right. So I couldn't agree with you more. I think you made some fantastic points. Madhu, from your perspective. And obviously, S&P Global market, you know, we across our many different divisions and different businesses, particularly ours around coal production and post trade. You know, we have looked at this and we are embracing it to Julie's point, but looking at it, not just putting what we do today in the cloud, but actually what the future should look like. Love to get your thoughts to share with the group.

Madhu Ramu 29:47
Yeah, sure. I see in two ways. I mean, if we look at SAS, it now means that small and midsize asset managers can actually succeed. So irrespective of the size of the firm, they can now access have access to, you know, similar technologies that were at one point reserved only for the big investment firms, they can actually be on a level footing with larger players at an affordable cost, like footprint, short time to execution and request sort of low maintenance. And also, you know, kind of given the ease of outsourcing large parts of this activity chain, I mean, technology enabled small players will, will be able to try to, right, so, if you look at small asset managers who can actually stitch together best of breed competence to create an efficient operating model will actually achieve lower operating costs, greater operational flexibility. And, you know, they'll have the ability to focus on, you know, core investment capabilities that, I mean, we could take a simple example, you know, 15, or 22. So, you know, imagine the exchange between the custody and a small player, like, you know, you know, you'd have to send complex announcement on an email, or a web portal, and then, you know, forms have to respond back again, on an email or web portal, or fax, I mean, with this, you have the 15, or 22 capabilities, you can send messages over the Swift, it's low cost, but then it's driving that reduction in overhead, both for the large firms as well as for the small firms. So I think, in a way, like, you know, enabling smaller players to move on to SAS will help the industry as a whole to achieve more sort of STP and automation. And with Cloud, I think the way I look at a JD is like, you know, sort of increase focus on technology, I mean, a lot of firms are really looking externally for solutions, right around data and analytics. So simple thing like an API technology now allows firms to plug into sort of larger ecosystems that they never had access to. So making sort of, you know, those missing tools previously more accessible now, as well as allowing more sort of seamless exchange of data and information. So I think with cloud, you really get the, you know, optimum service in platform consisting of both your own proprietary applications, and best in class when the products they previously didn't exist.

JD Singh 32:07
Now, great. I’m going to move on to a question, which I think, you know, both Julie and Madhu, I'm sure will have some great, you know, thoughts around, you know, my view on this is, is basically maturity matter, yours. And, you know, we are heavily invested in our people. Right, I think Julie's mentioned this in a number of conversations today, before us, you know, I backbone of our business, you know, and you can talk about technology and into our managed services. But if you look at our core MCA offering around Managed Data Services, that really is the backbone of people, right, deep subject matter experts around the world. When corporate actions was easier, we want to argue 10 years ago, well, is a hell of a lot more complex now. And getting more complex. I mean, specs alone has shown us in the last 12 months, the sheer explosion around that and customers needing help to understand and be able to use that information. So deep subject matter expertise is is that gold dust. So post COVID, the world has changed. And I think you touched on it earlier, which again, resonated almost like it, you know, I was talking to us and thinking, Oh, my God, these are the exact points that you're gonna have a conversation with us at this conference. But those people, right, that now we have a shortage of experienced professionals, companies are still figuring out options for embracing new concept of work from home. So how are firms gear to deal with this? Now we have our own take, right? With Maddie we're talking about because we are in the same challenge, where we have a deep subject matter experts who are supporting our customers. But Julie, starting with you, you know, what are the plan to mitigate risks associated with this critical human capital?

Julie Leigh 33:46
Yeah. So like, as you say, it's like, it's a topic very close to my heart. Right. So but like body I've got, you know, I've just shy of 400 people across nine different locations that are working for the end corporate process. And, you know, I've seen this child globally. So this is not unique to any one region. I would say there's a few things here. Right. And a touched on it earlier. I think, first and foremost, before we talk about automation. We need to we need to keep people so you know, these are these are people who have really stepped up through the pandemic, right? These are teams who have worked ridiculous hours to manage volumes worth a war or tration. What a lot Australia's wet growing business with complexity. And and people are tired. So we do need to very quickly start to look at how we can better support our people as we move into next year because I absolutely do not expect things to be any different, right? I think Lucas mentioned but in growth mode, and actually we are right, that's what we're seeing across the end. industry, and we need to be prepared for that. So, you know, some of the things that we've done initially is, as we've looked at, you know, going up incremental headcount, and each of our different regions, easier said than done, because it's very difficult to get the talent. So then they've seen people that are strange, they haven't to focus on training the people that they come in, you know, we've we've outsourced certain functions. And we've looked at whether there's any capability to outsource more of that and outsource that quicker as well to gain relief, some of the pressure, and we have looked in front offices to make sure we've got much more front to back coordination, so that there's a better understanding of what we're doing and understanding of what they can do to better support the teams to be more effective and efficient. And just have a level of understanding. You know, we've proactively reached out to clients to make sure we get to be communication, especially around things like claims management. I mean, when you look at the US, for example, we look at mailto. So I think we seen something like a 400% increase in the amount of events that we were processing this year in North America. And it's the volume of claims. And you see on the back of that, and, you know, this is all stuff that you know, we are consistently killed in so in a truly agile way, with killed dental tech partners to look at, what are the quick solutions? What can we do? How do we recover a fleet to we could create an efficiency? You know, how do you need reprioritize? Come back to the point earlier, you know, how do we move things forward, get it done more quickly. So I think there's a whole suite of things that we need to do. But I think the pennant all of that is we need to continue to manage people, make sure they're supported, make sure they've got the right tools. I also think we then strategically I need to make sure that we have a very, very good plan for how we are going to expedite that technology. We know how we're going to outsource what we're going to outsource, what's the solution that we're outsourcing versus automating? And we need to do we need to do all of that. And we need to do that in fairly short order.

JD Singh 37:09
Now, great, thank you, Madhu, you and I've spoken about this numerous times. Love to get your thoughts with the group?

Madhu Ramu 37:15
Sure. Firstly, I'll say I mean, I don't envy. Julie, for people as is a lot. I mean, getting work done is the easy part, managing people is a whole different ball-game. But, but definitely, I think the long-term impacts on day-to-day operations, you know, due to this due to the new operating model is yet to be seen, right. And also, we're dealing with this, you know, I think there was this article with the title, great COVID job churn, like how many friends and family that we know who were actually, during this time decided that you know what, I'm going to take a break for three months, six months, I'm going to reevaluate my career, I'm going to see where I want to go like, and that's happening across the board, you know, with shortage of staff and people on the other spectrum, you know, taking time to decide on what they want to do. It's, it's quite challenging to get get down to people. And also, I think, with corporate actions, you have a very sort of limited ageing workforce with with that required knowledge and expertise. I mean, how many voluntary corporate action specialists can you get? You know, today, because the, there's a real shortage of it, and the new people who are joining in, they need to do the time, right. I mean, you need that 510 years in that space to really learn and experience based on, you know, all the events that you've handled. So that I think that that's again, causing another challenge. So definitely on the on the operation side, I mean, these remote models for work and customer service, you know, will clearly emerged as you know, permanent fixtures, so, but this is also brought to light optimization opportunities, right for us. Because I think the most pronounced opportunity in this is around location strategy. So the pandemic has really taught us that, you know, working remotely may be a viable option. But, Julie, I think, again, to your point, this needs to be explored further, while we improve employee work life balance, and ultimately improving efficiency. So, yeah, because a lot of planning ahead, investments in lnd, graduate associate programs. But I think we've been able to, you know, manage because for us, this is the profit center. It's not a costs cost center. So for us, we have invested through early and building capabilities around those to ensure that, you know, we have a good mix of experience and new people that are able to, you know, generate that consistent performance across the board. And again, technology helps, right because, you know, the system also needs to be smart enough. You know, whether there's an experienced person sitting behind it or somebody straight out of college, it needs to have the checks and balances To ensure that whoever is the user, it still does a little bit of quality control. So, yeah, I think that's definitely something to watch out for.

JD Singh 0:09
And on that Madhu right, I guess I start with Julie first. But I guess, you know, as an extension of that conversation, previously, firms have been reluctant, right? You've had this conversation with a number of customers about embracing the whole outsourcing nature of operations, but primarily because there's a lack of control in a critical area or a perceived lack of control. However, several firms have already successfully done this and outsource the operational task of creating that final issue of golden copy. Right? So basically augmenting their operations today, with a, you know, experience managed service provider. So number of steps have been taken to outsource anti aging validation scrubbing process – Julie, is this the path forward to consolidate these asset servicing processes with a partner who can do that? Do you see that as a way forward?

Julie Leigh 1:03
I do see that as a way forward. And I think that, you know, as we, as we move forward, we're seeing that these solutions are cost the fate of, you know, we can have a validated single source that everyone loves to do use, that reduces the risk, it can help us solve for inconsistencies. And due to the expertise point that you mentioned on as well, I would say that, you know, I get the nervousness at times, for people to fully outsource it, because you can outsource function, you can outsource the risk. And the expectation of clients as well is that, you know, regardless of where you get your data from, if that data is okay, then it's your fault. So, you know, you need to make sure that you are comfortable. I think, you know, there's potentially a balance there. And until, until we get to a point with as an industry we're comfortable with, to an extent a single utility, right. But, you know, I think you can still consume other sources and do some form of validation, to get to the point where you're comfortable with that single cotton source. But I do absolutely see it as the way forward. And I think, again, you touched earlier on clones. And I think there's all of this comes together. And we get to a point where we can have one single golden source that everyone's comfortable with everyone subscribes to, that what we really start to see economies of scale and efficiencies. And it starts to reduce that requirement to have those key experts across every single company as well. So I do see it as the way forward, JD.

JD Singh 2:39
Great. Madhu, do you get your thoughts on this?

Madhu Ramu 2:45
Thanks, JD. Yeah, actually, I want to mention one other recent survey site, but by value exchange, I think they interviewed, you know, hundreds of firms. And one thing that came out was that about 31% of cooperation costs are consumed by the need to clean, augment and interpret even data. I mean, the number is probably low. But in short, you know, we're looking at 1/3 of our production costs are driven by the lack of confidence and completeness in the information we receive. And also manually sourcing and rekeying, you know, information dominate the SOC space, right, in every step of the chain. So again, that increases costs and risk as well. I think across the investment cycle, they said, the average bank receives about 43% of its of its corporate action data, yeah, entirely manual mechanisms, and about 50% of the bank's publishing the data in standardized formats, you know, with any reasonable level of automation. So, these are all staggering facts, right. So, in an industry that is increasingly commoditized, and investors are focusing on, you know, so intently on cost banks, asset managers cannot ignore this fact anymore. So, I think, yeah, this will definitely, you know, be one of the most, you know, viable options, because, you know, you get a lot of benefits, right? No, you get 24 or seven coverage, you get expertise across the board, you don't need to have, you know, teams from Australia to San Francisco, and have the subject matter knowledge across the world. But, you know, with a managed service provider, you know, you can actually get that, you know, at scale, and other critical, you know, aspect is the professional user community, because, you know, with a managed service provider, your operational risks are significantly reduced, because the processes enhancements go through a critical review by all the clients with similar needs. So you're kind of on a level footing with, with your, with your competition at all times. And also, you know, you are able to kind of, again, to my earlier point, with managed services, people are the profit center, so they're going to invest more, you know, for them the capable running an efficient processing of, you know, let's say corporations in this case, is the key objective versus with the firms. This will just be the cost center, which cannot get enough investments at all points in time. And yeah, and the other point is also around scalability, right? Because with managed services, a lot of these costs are scalable. So today, you could be looking at a portfolio of 100,000 securities, you want to quickly ramp it up to 120 1000, bring it down to 80,000, you can do that and the cost can vary interview having a fixed cost model that may not work well with the product objectives. So yeah, definitely, I think, you know, with all these advantages, I think, you know, this, this is definitely a very viable options that that forced me to consider.

JD Singh 5:40
Yeah, no, that's great. Thank you for that. I think, you know, everything, both yourself. And what Julie said, I think resonates with a lot of people, maybe go back 10 years ago, you know, DTC offered the GCA service, which is kind of a first step. But I think along the way, lots of change. But I think, you know, the lack of transparency, typically around corporate action, just looking from a data perspective, right? How can you make informed decisions, when you don't know where the data is coming from, you know, and most customers have the challenge of taking in a single source data or multiple source data feeds, and trying to figure out what the truth is, right. And again, you know, you deep subject matter experts can do a lot but its very time consuming. So if you can also have that, if you find someone in those in the marketplace that offers a truly manage, you know, scrubbed issue or record. That's the first part. And then again, you're getting the agent validation, which is, then you compare that to the agent record. And then obviously, S&P Global has been in this space for a number of years. But I think it's a very challenging market. And I think that the key thing I always ask you know, if I was on Julie’s seat or on Lukas’s side of things, I would be asking, Do I have the transparency I need? Do I have the you know, the audibility, the accountability, right, the vet? Can I hold the vendor accountable? Meaning Can I least honestly ask them, you gave me this on this day? At this time? Do you stand behind what you gave me? Unfortunately, a lot of data provided will give you data. But unfortunately, that's still the challenge in the world of corporate actions. But there are solutions out there.
Now moving on to next question. Really, you know, talking about 2022, right, which is not too long away. And we just got past Halloween, Christmas is here, for most of us is continuing into this new year. So Lukas, starting with you, what are the biggest challenges firms are facing when it comes to CO production as we get into 2022? So what challenges or opportunities do you think the new year will bring?

Lukas Wong 7:35
Yeah, that's a good question. I think we've obviously touched upon the volume of CO production and the complexity, I think, start with opportunity. Because I'm an optimist, I guess, you know, for investment funds financial firms that take risk around these things is obviously a great setup, we've seen a big increase, I would say, in our client base of, you know, particularly on the sort of hedge fund side of a lot more clients looking, you know, having specialists and trading athletes who are, you know, trying to monetize corporations taking a lot more risk around them. So, you know, from from a financial opportunity set, you know, it's great for that client base. And you know, corporate actions are somewhat cyclical, it feels like we're definitely in a cycle where, on the investment side of things, it's definitely front of mind. And people are, you know, making money out of corporations taking risk, the, you know, risk limits. There's definitely appetite in the market to take risk around these events. I would say with that, obviously, comes the challenges, I think in in sort of, I guess, in in mind and Julie’s spaces, if you're, if you are servicing that client base, ultimately, if you're a satisfied institution, the buck stops with you, which I think was kind of been touched upon in the previous topics is that you your requirement for deep subject matter experts will remain and will grow. And I think definitely the aging population, if you like or the other expertise passes through, its, you know, where does that come through as these corporations get more complex? And what backstops do you have in the event that, you know, you are dealing with ultimately risk takers who want perfect information? And will often rely on the sell side for that? So for me, you know, in the seat we're in it's about how do we how do we one use as much data as we can in a scalable way from vendors, you know, and managed solutions definitely formed part of that I think the challenge will be that there is that I don't think, you know, I don't think the industry is anywhere near getting to a place where you can actually ask anything that you would want to know by actually reading a prospectus front-to-back right ultimately, that's that on the south side, that is where you have to get to right that is what ultimately your client base will expect of you. How much of the easy legwork or the repeatable legwork can you take out of it using technology? Maybe 80 90%. But there's always something in the nature of a call to action that, you know, will trip up the market and that is often where opportunity and challenge lies in my view.

JD Singh 9:55
Great, thank you. And, Julie, your thoughts on this?

Julie Leigh 10:00
So look, I think very, very similar to Lukas, which is, we definitely, you know, in terms of managed services, we definitely need to leverage leverage, the more we need to continue to partner and look at where it makes sense to do that, you know, for move to cloud gives us even more opportunities to do more than industry, then absolutely. And then it's the balance between I suppose outsourcing their sees what we build ourselves as well, and what we keep in house, how we continue to develop expertise, when we have, you know, groups of individuals, sometimes close to retirement, right? You've got all the experience, and we need to find ways to train and actually doing that alongside continuing to meet the needs of the clients. I mean, even this year, we've seen you know, last year, we're seeing increasing sparks this year of Sindhis, Baskins, neon season withdrawals and what you can do in different windows and, and all of these different nuances that take experience and people who can read between the lines, you know, legislation perspective guys, you can read these things, understand what's not jumping out at them? And what are the legal departments and some of the complex dorks walk across business units, there's just a huge amount of critical expertise that will always continue to be required. And I think over the next few years, it's just getting better at knowing how we balance and the balance that gives us the most flexibility and the competitive edge as well. Right? Because let's be honest, with corporate actions, there's always that competitive edge and you know, back to your ones, we'll always be looking for that competitive edge. And that competitive edge comes from all those different things.

JD Singh 11:50
Yeah, I think some very, very key points there, Madhu from your perspective on 2022 with challenging opportunities.

Madhu Ramu 12:00
Yeah, I think I'll keep it brief. I think Lukas covered most of it, I think, from my view, anything data related that enables sort of data driven decision making provides business insights, or, you know, connects data across multiple processes are prime candidates for managed services. And I think that that space is growing, you know, quite significantly, right. So comprehensive data strategy will become paramount in the in the coming years, I think, you know, most global asset managers will continue to accelerate in those areas around data and technology. So, yeah, I think the ability to get accurate and timely data is ultimately going to drive most of the investments in the future.

JD Singh 12:42
And I think some of the initiatives you're working on will be key, right? I think as you look into 2022, I think one of the key initiatives I know the team is working on an S&P Global, particularly led by you, is about giving our deep subject matter experts, you know, that real time interface to customers. So today, we have a huge support model, which we do, you know, in numerous different channels. But to have a real time communication, now, you're going to have our SMEs directly interfacing with customers or, you know, operations teams in real time, you know, via numerous chat functions and what we're building, I think some of those will be huge opportunities for customers to get even closer to the work that our teams are doing. So I think that will be a huge thing for 2022. As we look to close the discussion, I guess the last question, and Julie will start with you, if you don't mind, I guess just to wrap up, we're gonna ask a very broad question, you know, how do you see the corporate actions, space evolving in the next two to three years, and I know we covered a lot of these points already. But just to get your thoughts around the next two to three years. And generally, you know, your feeling today, you know, I do feel you're in a overall good space, and the next two to three years look optimistic or, do you see more challenges ahead? Would love to get your thoughts.

Julie Leigh 13:54
So look, I'll keep it brief, but I would say that we have covered on a lot. Obviously, it's an exciting time to be in the space, right? I think that there is real momentum, both in the industry, but also internally as well to drive change drive automation. It gets to a point that was just never been out. I mean, I came into corporate actions just five years ago, and animation to spawn, and I'm a relative newbie. And even in that time, the change has been significant. And, you know, I think for the last 20 plus years, all these manual processes and legacy, this is the tone for change, the momentum is there. We need to be able to tell the story, we need to make sure we get the funding to make the change, but the momentum is there. So I think it's an exciting period to be in space.

JD Singh 14:44
Yeah I know, and I'll echo that I think, along with momentum, I think the will to change is finally there, right? I think, in the past when you talk to folks who have been in this space for the last, you know, 20 years, I mean, you know, some of our experts in Madhu’s world have been in what, 30 years, maybe 30-35 years some of these SMEs, and they'll say on things have changed, but not really. But I think now, it seems like you know, the last 12 months for sure. The will of firms to actually really make a change. And to finally, Julie, not just take what we do today, put it in the cloud and say we made a change. And we'll look at opportunities to change, same thing that Lucas has echoed as well. And with that, you know, unfortunately, we're up for time. So I know, folks, when I go grab lunch, I want to just start by saying thank you again, to a great panel. Lukas. Julie, it was a pleasure having you as part of our panel, Matthew, always great to talk to you. We do it every every day. So it's always a pleasure. But again, I hope that hope folks found this interesting. I know we're back at 130. So folks, next session starts at 130. Again, Julie Lukas, thank you, and I hope focused on this as interesting as I did. Thank you.

Madhu Ramu 15:57
Thank you very much.