DTCC Executives Predict 2021

Mike Bodson, President & CEO, DTCC

The extreme market volatility and volume experienced during the early days of the pandemic reinforced the critical role that market infrastructures play in protecting the safety and stability of the global financial system. The crisis also shined a light on the need for increased automation to strengthen resilience, reduce risk and costs and enhance efficiencies. Looking forward, we expect automation and fintech to continue to shape financial markets, but unlike the past, new technology solutions likely won’t be implemented with a Big Bang approach. Firms will want to balance legacy systems and new technology for a period of time to mitigate risk and manage costs. We also expect to see an acceleration in companies wanting new products and services developed rapidly and incrementally to meet their immediate needs, rather than a wholesale overhaul that may take years or be cost prohibitive to implement. As new technologies grow in prominence and solutions are delivered, governance and industry standards will become all the more important to make sure they offer the same, or a better, level of risk reduction and protection for firms and investors.

Keisha Bell, DTCC Managing Director and Head of Diverse Talent Management

The COVID-19 pandemic collided this year with the long-simmering issue of systemic racism to shine a bright light on the inequities and challenges facing black and brown communities. The frustration and calls for action we have seen from people of all races and backgrounds in response to this is an inflection point for society. Corporations led the way in fostering positive change in 2020, and they must remain focused on continuing this progress in the years to come. We will need to further prioritize programs to grow, cultivate and support diverse talent while providing learning opportunities to foster more supportive and inclusive environments. This journey will require the commitment of the most senior levels of organizations to achieve the shared and just goal of racial equality for people of all diversities.

Lynn Bishop, DTCC Managing Director and Chief Information Officer

Advances in technology enabled the industry to do something that few would had considered possible before the pandemic: Shifting almost entirely to remote working virtually overnight and continuing to operate seamlessly throughout the year. Technology is an intrinsic part of our business lives, and as we look to the future, firms will need to increase investment in systems and processes that support virtual work, including collaboration and communication applications that feature strong cybersecurity and risk management capabilities.

In addition, a key priority for many firms in the coming years will be modernizing legacy technology. At DTCC, our goal is to create a more flexible infrastructure that can quickly adapt to evolving client and regulatory needs. To help bring our future state vision to life, we will continue to emphasize the importance of building diverse and inclusive teams and promoting a collaborative culture to more effectively problem solve the complexities of new global business challenges.

Marie Chinnici-Everitt, DTCC Managing Director and Chief Marketing Officer

In 2021, I anticipate that the competitive landscape will continue to heat up, with increased competition between incumbents, fintechs and others. In response, we will likely see more and more firms focusing on client experience as a key differentiator. Firms that provide a superior client experience will have the stronger value proposition and a leg up on the competition. In fact, client experience is so important that I consider it to be a defining issue of the future. Firms that adapt to the needs of the next generation of clients and provide the greatest value will be best positioned for long-term success.

Susan Cosgrove, DTCC Managing Director and Chief Financial Officer

Managing high levels of uncertainty created by the COVID-19 pandemic will dominate the agenda of CFOs in the coming year as we look to balance the short-term needs of addressing shifting markets with a long-term focus on business strategy.

The uncertainty surrounding the global markets in 2021 means organizations must plan multiple scenarios for revenue and investment so they can pivot quickly depending on external dynamics. During this period of heightened uncertainty, CFOs must be sure to monitor the broadest range of issues, including liquidity, market value changes and economic fundamentals, such as earnings forecasts, interest rates and central bank actions, to ensure they have the proper risk management and financial levers in place.

Additionally, while management will likely have sharp focus on current priorities during a crisis, CFOs must take steps to ensure that the longer-term view is not lost and the organization maintains a culture of growth and innovation. As the pandemic hopefully subsidies in 2021, firms must have a robust pipeline of initiatives that create greater value for clients and solve new business challenges.

Andrew Gray, DTCC Managing Director, Group Chief Risk Officer

Resilience is built into the DNA of DTCC and serves as a core capability across financial market infrastructures. COVID-19 reinforced the importance of being prepared for extreme events, and the actions we’ve taken in recent years to plan for disruptive scenarios such as a pandemic, allowed us to act quickly to maintain stability at the height of the crisis and in the months since. As many countries battle a second wave of the pandemic, our recent Systemic Risk survey found that the COVID-19 crisis is considered the greatest threat to global financial stability in 2021. We are working closely with clients and key stakeholders to further enhance resilience so that the industry is prepared to continue operating in the midst of the stresses resulting from the pandemic and in the event of additional potential market shocks and disruptions.

Murray Pozmanter, DTCC Managing Director & Head of Clearing Agency Services and Global Business Operations

The pandemic refocused attention on a critical issue facing the US capital markets —the complete dematerialization of physical securities. We believe this should be an industry priority in 2021, and we are pleased that key industry groups like SIFMA and STA support this effort. Across the global economy, consumers have embraced cashless and contactless commerce. Physical securities are no different, and dematerialization opens the door to creating a more streamlined and secure approach to settlement. At DTCC, dematerialization would allow us to shift $780 billion dollars in assets we service from physical to electronic form, significantly lowering risk and costs.

We will also continue to focus on how we can drive further efficiencies in the US clearing and settlement process, leveraging a mix of new technology and process enhancements. Projects Ion and Whitney are two exciting initiatives that are actively exploring the benefits of digitalization in the public and private markets and whether new technologies can strengthen post-trade processes while reducing risks and costs.

Stephen Scharf, DTCC Chief Security Officer

The speed and scale of the COVID-19 pandemic served as an extraordinary test of resilience and preparedness for organizations across industries. As we move into 2021, I anticipate three areas will be top of mind for security professionals. First, resilience will continue to be a crucial consideration for all firms, and from a cyber security perspective, it should be embedded into every security initiative that is pursued. Second, with companies continuing to adopt new technologies and outsource operational services, organizations must ensure they are effectively managing and addressing all third-party risk in their supply chain as well as potential cyber security gaps. Third, collaboration and information sharing are key to preventing cyber-attacks. Firms will need to strengthen their coordination with regulators in multiple jurisdictions, their peers and other key stakeholders and share threat information and incident reporting data to protect the industry and consumers.

Matthew Stauffer, DTCC Managing Director & Head of Institutional Trade Processing (ITP)

The impact of the COVID-19 pandemic focused attention on the need to prioritize middle- and back-office automation, creating a strong case for strategic investment to enable a no-touch processing environment. In March 2020, we saw record volume and volatility, and firms were challenged by the operational backlog and reconciliation required due to manual processes and legacy interfaces. As we move into 2021, firms have greater clarity about improving operations to better handle sudden increases in volume and volatility, and for ensuring transactions are handled seamlessly throughout the trade enrichment, matching, confirmation and settlement lifecycle. By leveraging a common industry trade processing platform and infrastructure, firms will seamlessly connect to their global community and be better prepared for the next unexpected market event as well as upcoming regulation like the CSDR Settlement Discipline Regime.