TCS BaNCS / insights
With a GDP larger than China and Japan combined and daily trade volumes of more than 5 BN, the United States has been and will continue to be the most critical financial market in the world, both from the participant side and the market infrastructure. A bull or a bear rally on the Dow Jones Industrial Average triggers immediate reactions at the Nikkei, Hang Sang, Sensex, and FTSE.
The US capital markets lead the world in size, influence, and liquidity, with US equities representing over 38.5% of the global market cap, a far larger share than any other region.
However, it is also important to call out a few counter-intuitive aspects of this market.
The biggest challenge toward the modernization journey that the financial services sector in the US faces is the sheer volume of transactions and the billions of lines of code that have grown on legacy technology over the decades. This brings us to the critical responsibility of carrying the financial services industry into the digital era. Financial technology providers have to provide digital technology and risk-mitigated mechanisms to migrate data from the old to the new without breaking the plumbing.
For over 25 years, TCS has had a powerful presence in North America, addressing the critical needs of the US financial services industry. In doing so, we introduced pathbreaking concepts into the core technology used by top US financial institutions, and the network effect compelled other top players to either adopt TCS BaNCSTM or develop similar technologies.
TCS BaNCS started as a modern, future-ready solution providing real-time, event-driven, multicurrency, multi-lingual, multi-market capabilities. Our capabilities were unmatched in the industry when TCS BaNCS entered the US market, and those capabilities remain unmatched today.
Just over twenty years ago, we became the fintech partner for a top custodian and a top fund manager – each a household name and American icon. In these initial engagements, we automated corporate actions processing, which involves multiple handshakes from external data providers, processors and analysts within the bank, and electors from customer organizations. Through our efforts, we implemented necessary controls to protect the banks and their customers from significant financial risks.
Since then, TCS BaNCS has never looked back. TCS BaNCS in North America expanded horizontally by acquiring a dominant market share for our core asset servicing offering in corporate actions and custody and vertically by moving up the value chain with wealth management and private banking solutions.
Today, the TCS BaNCS solution services the top 3 of the 4 US banks and a top 3 asset manager. TCS BaNCS holds the unmatched distinction of servicing the corporate actions processing needs for all segments of the securities industry – asset managers, brokers/ dealers, and custodians. We are the preferred choice of top US banks across a full range of asset servicing solutions.
TCS BaNCS customers benefit from the highest levels of service quality and the highest STP rates. With TCS BaNCS for Corporate Actions, we have significantly reduced settlement failure, ensuring receipt of monies or securities from counterparties into customer accounts in the shortest possible time. High levels of STP also mean lower levels of manual intervention and the reduced incidence of human errors and their resulting financial losses. As part of automating operational processes, TCS BaNCS also has enabled customer self-service so that end customers can take control of their financial lives by managing their own transactions while ensuring non-repudiation and reducing errors for our financial institution clients.
Not only have the real-time and STP capabilities of TCS BaNCS improved operational efficiencies and reduced risk, but TCS BaNCS has also delivered a competitive advantage for banks facing the daunting challenge of accelerated settlement cycles. For example, when SEC and DTCC initiatives moved the industry from T+3 to T+2 in 2017, TCS BaNCS customers handled the transition seamlessly over a single weekend. The DTCC-led T+1 transition is planned for May 2024, and TCS BaNCS customers will be prepared for an equally fast changeover.
North American securities market strategy
Our overall strategy for the North American securities market focuses on four areas below.
In addition, our technology platform enables new entrants to leapfrog the incumbents with real-time solutions and T+1 readiness. For example, a top European bank was the first customer of the real-time TCS BaNCS solution for US Custody and Settlement.
2. Business-class technology
The smoothest and simplest user experiences are typically found in the front office and client-facing systems designed for individuals and retail customers. With TCS BaNCS, financial institutions can create superior user experiences from front to back, anywhere in the organization.
A top US bank sought to deliver best-in-class user experiences and SLAs to its institutional customer base, including the middle and back-office operations teams servicing customers. Following two years of due diligence, TCS BaNCS was selected for this initiative just at the onset of the pandemic. Using TCS’ Secured Borderless WorkspacesTM (SBWSTM), an industry-leading framework for remote work, TCS forged an excellent partnership with the bank to deliver an asset servicing offering that reduced manual interventions by 80% and achieved an STP rate in three 9s and above, leading to a significant positive impact in end-customer SLAs and a marked improvement in NPS. With this effort, the bank is on track to capture a leading market share in the US Brokerage Prime Services segment.