Voice of the Industry

The securities market banks its future on improved connectivity and back-office simplification

Friday 18 March 2022 09:20 CET | Editor: Oana Ifrim | Voice of the industry

Simon Pilgrim and Paul Driver discuss how the Bottomline Technologies and ERI partnership can help the securities market automate, secure, and simplify their reconciliations and data management processes

It’s understandable if you think a mind like Albert Einstein’s was obsessed with complexity. After all, quantum theory, relativity, wave-particle duality – great minds have struggled with these concepts for more than 70 years in classrooms and more sophisticated physics labs. But Einstein was not a fan of complexity and was frequently quoted as saying: “the definition of genius is taking the complex and making it simple.”

Anyone who’s tackled the technology behind current banking innovations is probably looking for that type of genius. While digital transformation isn’t quantum theory, it does come with its own set of complexities like hybrid service models, the ability to change quickly, and manage against cyber security threats. And those complexities are best expressed simply. For example: automate, reduce errors, compete. The complex to simple process has challenged financial services businesses even more so since the beginning of the pandemic where we have seen a concerted push to drive for transformation, and now it has arrived on the doorstep of the securities market. This market and the asset managers who drive it, have complex challenges such as macroeconomic uncertainty, heavy regulations and a plethora of core systems and payment mechanisms to choose from. 

And it also suffers from the same simple pain points. For example, legacy systems and analog processes have come up short in relation to the speed of this market, which BCG measured at USD 103 trillion in 2020. The time is ripe for a reassessment of securities market strategies to ensure that service models, as well as end-to-end technology, are up to the task as lower margins and higher operational costs become more challenging on a global basis. Core banking systems, financial messaging and payments platforms are critical. Rapid acceleration of digital transformation and the rising demand for digital assets and cryptocurrencies have become urgent as automation comes to a sector of the industry that has been slow to adopt relevant technology. 

New Challenges and Expectations:

If you’re an asset manager that needed to simplify the securities market, it would most likely centre around limiting risk and volatility. Those are also relevant issues when it comes to digital modernisation. For many FIs, the failure to connect the business internally and externally has led to risks emanating from operational silos, breakdowns in communication, and increased workloads further down the chain, which frustrate clients and eats away at profits. Integrating new core digital banking capabilities have changed the expectations of those clients very quickly. It’s not realistic to introduce new virtual channels and expect the increased demands on the middle and back-office operations to fall into line. But it is necessary, and potential third-party partners must enable businesses to have a tightly integrated front to back solution that creates options for connectivity.

That transformation also allows asset managers to meet new expectations from clients. Clients want to see their brokers moving forward, giving them greater speed, flexibility, and transparency. Like any consumer, investors expect 24/7 service across all channels. These new ways of working have had a significant impact on back-office operations, with increased volumes highlighting the struggles that many institutions face in operating around disjointed legacy systems and processes.

And meeting those challenges can also create the desired simplicity. By removing the need for multiple software platforms, the securities market can have better visibility of data, and greater ability to scale. And if the right combination of partners can align, the results can open even more doors. For example, combining the core banking system with integrated connectivity will have systems updated in near real-time, more actionable and accurate data, dashboards to view it on and seamless workflows to bring operational information straight to your screen. This kind of integration creates end-to-end connectivity and easily accessible APIs, better middle and back-office efficiency and compliance in an increasingly complex regulatory environment. 

Translating New Messaging Formats:

For transformation in the securities market, data innovation can be summed up as ISO 20022. By enabling better structured data, ISO 20022 creates new business value by automating manual processes, improving settlement and reconciliation as an example. ISO will also help the securities market build the bedrock of digital transformation, which is interoperable APIs as well also preparing securities firms for Distributed Ledger Technology (DLT) and asset tokenisation. The interoperability and standardisation of ISO 20022 accelerates workflows, data, and connectivity at a time when operational delays could mean the difference between success and failure. 

It can also mean a difference on the P&L statement. Here cloud technology is essential. The cloud is economically efficient as it presents less infrastructure to manage and fewer people to manage it. It enables you to look for new services and integrate them, making a securities division more agile. The need for that agility comes from a change in the environment as well as new assets like digital tokens, which will be an essential capability to attract new and younger customers. SaaS-based platforms move with the market to deliver a wider variety of digital experiences. 

The Bottomline: The solution is to take the complex and make it simple. That is the goal of the partnership between ERI and Bottomline. The partnership takes Bottomline’s SaaS-based financial messaging capabilities and integrates them with ERI’s OLYMPIC Banking System. The result addresses banks’ needs to automate, secure, and manage their payments and securities business, and simplify reconciliations and data management processes. Through collaboration we can streamline your business, remove a lot of costs, modernise back-office processes, bring additional value and connect to offer more choices for the whole ecosystem to be interoperable. Asset managers and the securities market in general can become part of a more connected and efficient securities market. 

About Simon Pilgrim

Simon works for the Financial Messaging division of Bottomline Technologies focusing on Banks & Non-Banking Financial Institutions. His remit is to help deliver a single SaaS platform for payments, securities and messaging that helps financial institutions achieve lower costs, wider reach, speed-to-market, industry compliance, greater security and improved risk management. In particular, he looks to remove friction in back-office operations by delivering solutions and services designed to automate and streamline payment and post-trade settlement processes. 

About Bottomline

Bottomline delivers a single SaaS platform for payments, securities and messaging that helps financial institutions and corporates to achieve lower costs, wider reach, speed-to-market, industry compliance, greater security, and improved risk management. 
Payment & Cash Aggregator • Financial Messaging & Connectivity Aggregator • Securities Aggregator • Fraud & Financial Crime Management • Data, Insight & Analytics 

About Paul Driver

Paul has over 20 years of experience working and consulting within the financial services industry, empowering institutions to challenge the market, improve business performance and reduce operational costs through the use of integrated front-to-back customer centric solutions. Paul adopts a consultative approach to technology sales and strategy, partnering with clients and collaborating within the broader ecosystem to solve the problems that deliver real business value and transformation. 

About ERI

ERI provides a digital, front-to-back, open and highly flexible technology platform - the OLYMPIC Banking System - supporting banks and financial institutions with streamlining their business activities to drive front-to-back efficiencies, control costs, and ensure compliance across their clients’ entire lifecycle. The system supports a broad range of functional domains and business segments including core banking, portfolio management, order management, CRM, onboarding, digital banking, fund, brokerage and custody services.

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Keywords: Bottomline Technologies, digitalisation, banks, core banking, ISO 20022, banking
Categories: Banking & Fintech
Countries: World
This article is part of category

Banking & Fintech