The worldwide banking and financial crisis was part of the global economic crisis that began with the US real estate crisis in the summer of 2007. Various aspects of banking regulation have attracted criticism in this context. The far-reaching and ongoing changes in the banking environment are reflected in estimates of the future business performance of the banks. SIX Securities Services can offer significant, long-term support here.
The decline in earnings in the traditional business areas of many financial institutions is recognized as a medium to long-term problem. The most significant challenges are the politically induced low level of interest rates and the adjustment of business processes in response to regulatory requirements.
"We must find ways of reducing costs sustainably," stated Sergio Ermotti, Group CEO of UBS, in an interview at the end of July 2016. However, short-term cost-cutting does not solve the problem of persistently weak earnings in the banking sector. On the contrary, there is even a risk that important and necessary steps in the areas of innovation and earnings growth will no longer be implemented because measures are being focused solely on costs.
The banks are working to achieve greater automation of standard processes, with the accompanying reduction in complexity. In fact Sergio Ermotti even proposes that a large proportion of transaction processing should be performed by a shared service provider. This is where SIX Securities Services comes in.
Let's take a look back to 1970. On 4 June 1970, Schweizerische Effekten-Giro AG (SEGA) was founded as a joint undertaking of the Swiss banks. The primary purpose of the company was to establish a central securities depository for Switzerland to simplify securities administration. In addition, SEGA aimed to rationalize and accelerate the settlement of securities transactions.
The financial system underwent fundamental changes over the next 46 years, as did IT. The current SIX Securities Services division, whose main services are (interbank) clearing, settlement, custody and securities finance, emerged as a result of a number of adaptations to changing conditions. So what happened to the basic concepts of the former SEGA?
In the financial sector's heyday, most banks exhausted their own options through economies of scale and thus built up parallel infrastructures. They are now tripping over these in an era of massive cost pressure. This is why it appears likely that external service providers such as SIX Securities Services will be commissioned to perform technical applications of a non-banking nature.
The goal of SIX Securities Services is to achieve the transformation from a largely transaction-based approach to a service-oriented approach. SIX Securities Services is therefore developing a package of value-creating solutions called Advanced Services. These services help reduce our clients' operational complexity, operational risks and costs. This leaves them free to concentrate on their core business activities and strengths. Advanced Services comprises two different elements at present: Advanced Settlement and Advanced Tax Services.