VIDEO | As financial institutions increasingly turn to technology and collaboration to meet evolving client needs, Swedbank and State Street are pioneering a unique model of partnership and innovation in the Nordics. At the PostTrade 360° Nordic 2024, speakers from the two banking giants discussed their peer-to-peer repo system, localised fund services, and customised technology solutions—all designed to set Nordic banking apart and transform securities financing.

At the heart of Swedbank and State Street’s collaboration is an advanced peer-to-peer repo program, which addresses the complexities of traditional securities lending. This platform allows clients to lend and borrow directly among themselves, eliminating the need for complex intermediation. A member of the audience queried whether the system required assets to be in custody, highlighting a central advantage of this model. “The whole point about any market securities financing repo is that this immobilises custody assets,” explained State Street’s Stuart Thompson, emphasising the security and efficiency gained by keeping assets within existing custody structures. This model not only streamlines the process but also positions Swedbank and State Street to bridge gaps in local expertise with global capabilities.

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Localised and personalised Service

Swedbank’s dedication to local engagement is a defining feature of its model, particularly when it comes to fund transaction services. As Henrik Reinfeldt, head of Securities Services at Swedbank, noted, “We have a local fund desk in Stockholm where we have local people executing the fund transactions and who are in direct dialogue with our clients.” This approach allows Swedbank to offer clients a unique combination of regional expertise and close communication, especially in markets like Sweden, where transactions require deep familiarity with local currency and regulatory environments. Swedbank has even positioned itself as the world’s largest clearing bank for the Swedish krona, underscoring its commitment to supporting local and regional currency processing, according to Reinfeldt.

Ivy League

In addition to securities financing, Swedbank and State Street leverage big data and partnerships with Ivy League institutions like Harvard and MIT to enhance their client services. “We created a joint company with academics and professors from these universities to say, what can you do with all this information?” shared Thompson. The result is a range of research and analytics tools that provide insights into inflation forecasting, investor behavior, and market sentiment. Their MediaStats tool, for example, scours global media to gauge sentiment on topics from Swedish equities to ESG trends, allowing clients to make data-driven decisions with a global perspective.

State Street’s data insights also drive their foreign exchange services, making them “the largest FX house globally, in terms of real money,” Thompson added. These insights, combined with State Street’s technological infrastructure, empower Swedbank clients to access global markets through an informed, locally relevant lens.

Technology investment and modernisation

Swedbank is also investing in a new custody platform, “Aron,” developed with the local technology provider Brokerway. The cloud-based system will replace the bank’s legacy mainframe solution, delivering improved data integration and flexible, client-oriented services. “A lot of people are not really developing their own systems nowadays,” said Reinfeldt, underscoring Swedbank’s commitment to building secure, cutting-edge solutions in-house. This approach ensures that clients can access services through familiar systems and workflows which aims to make it easier for clients to access both regional and international services without leaving their existing setups.

Looking forward, Swedbank and State Street see their model as a bridge between traditional banking services and software provision, offering both managed and platform-only solutions. By acquiring companies like Charles River Development and Mercatus, State Street is integrating a suite of tools that enable clients to manage investment and insurance assets more efficiently. “We can just adopt the elements that clients are already doing on the shared technology,” explained Thompson. This approach gives clients the flexibility to choose specific services they need without overhauling entire systems.

Speakers:
Henrik Reinfeldt, Head of Securities Services, Swedbank
Stuart Thompson, Managing Director, State Street Bank and Trust Co

Hosted by Swedbank.


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