Capital Markets innovation and the FinTech landscape

Post-trade
operations
Clearing and
settlement
Collateral and
margin management
Custody and
asset servicing
Treasury
operations
Reconciliations
Transaction
reporting Fees and invoicing Tax operations
Treasury operations
Capital requirements have increased significantly for most banks,
and liquidity remains scarce. Efficient treasury operations are
critical for meeting regulatory obligations to maintain liquidity
and profitability.
In this environment, there is a range of options that banks can
take. Externalizing the treasury management system via a
cloud-based solution significantly reduces cost and harmonizes
processing. Deploying RPA in areas where manual processing
is still required also reduces the bottom line and increases
efficiency. And deploying analytics solutions across multiple
repositories of information to provide a near-real time view of
cash balances and ladders offers true insight to support
decision-making.
Of significant interest in the medium to long term is the
opportunity for componentization of the treasury management
function. This can be done by utilizing open API services provided
either by the bank or by third parties to support functions such as
FX, transaction services and payments, helping to meet the need
for working capital and trade finance. This is one area where
disintermediation by FinTechs is a real possibility, presenting the
potential for banks to make cost savings and efficiency gains.
Reconciliations
Solutions to improve the efficiency of reconciliations have been
around for some years. Yet we still see some investment banks
employing thousands of people in this field, surrounded by a
proliferating mass of end-user spreadsheets and databases.
In our view, RPA can play a key role in reducing headcount,
particularly in relation to data preparation and break resolution.
Software robots can also significantly reduce the time taken to
complete reconciliations.
Add in Advanced Analytics capabilities, and reconciliation robots
could start to provide much more meaningful data about why
breaks occur. Then add in AI as well, and systems could even
start to address upstream issues to prevent breaks occurring in
the first place.
Reconciliation also lends itself to externalization. While basic
business process outsourcing has been applied to reconciliations
for close to 20 years, we are now seeing FinTech firms use cloud
and data visualization technologies to enable operations users to
view and reconcile their data in radically different ways.
Capital Markets: Innovation and the FinTech landscape | 47