SF Symposium: Manual processes hinder technological evolution
15 November 2024 UK
Image: Black_Knight_Media
There is a need for financial institutions to be agnostic towards new technologies because a one-size-fits-all approach is unlikely to succeed, according to the speakers who provided their personal views and expertise at the Securities Finance Symposium in London.
Roy Zimmerhansl, principal at Pierpoint Financial, who moderated the ‘Leaders in lending’ panel, set the tone by emphasising the need to improve business efficiency through incremental changes rather than large-scale overhauls.
The panel agreed that while there are numerous technology solutions on the market, integrating them into existing legacy systems and workflows remains a significant hurdle.
Ross Bowman, head of client management for agency lending and financing collateral services at BNP Paribas, says: “Where we need to do a better job is actually looking more internally to see whether we can fix the problem we’re trying to solve through our own developments a lot of us have purchased over the years, but we don’t use them to the fullest extent of its entire range of capabilities. So that means getting your own house in order.”
Regarding new technologies, he adds: “The reality is, in today’s market, you’ll still be dealing with half the entrance that will want to send you emails and use spreadsheets.”
In response, Eileen Herlihy, managing director and global head of Trading Services Sales at J.P. Morgan, adds: “Manual processes don’t perform well when you’ve got market volatility. And the more exception processes you have, the more that is going to hurt, especially in the period of market stress.”
Adnan Hussain, managing director and global head of treasury and securities lending at HSBC, highlighted the significant potential in regions like the Middle East and ASEAN, but cautioned that the diversity of these markets poses unique integration challenges.
"There are definitely opportunities, but the scale of those markets is enormous," he says. “Even when we think about the Middle East, while the countries might be fairly synonymous from the outside looking in, they are very individualistic and therefore do have very different infrastructures.”
Hussian believes the key could be introducing new technologies within these markets at an early stage, as they are building from scratch, to support wide adoption and better interoperability.
However, Bowman argued: "There is some adaptation you have to apply to those markets, which often creates manual processes and the less efficient processes when you start out, in order to get the market up and running for individual use cases.”
The panel also emphasised the appetite for intraday liquidity coming from emerging markets, specifically in Asia and Europe.
Towards the end of the discussion, the speakers shared their future predictions for the securities lending market.
“It may seem aspirational or utopic, but I think that ultimately, the industry will end up in a space where automation is assumed across the full lifecycle of the trade,” says Hussain. “However, the responsibility will still be around the analytics and the execution itself, as well as the maths and the mechanics around it.”
Wrapping up, Bowman notes: “There’s plenty of opportunity and solutions out there, but I think a lot of the change is not necessarily going to come as a big bang from the industry. It’s going to come from a lot of sweat and tears internally within organisations to get your own house working first, get your data clean and correct, and then you’ll be in a much stronger position to interact with the wider market.”
Roy Zimmerhansl, principal at Pierpoint Financial, who moderated the ‘Leaders in lending’ panel, set the tone by emphasising the need to improve business efficiency through incremental changes rather than large-scale overhauls.
The panel agreed that while there are numerous technology solutions on the market, integrating them into existing legacy systems and workflows remains a significant hurdle.
Ross Bowman, head of client management for agency lending and financing collateral services at BNP Paribas, says: “Where we need to do a better job is actually looking more internally to see whether we can fix the problem we’re trying to solve through our own developments a lot of us have purchased over the years, but we don’t use them to the fullest extent of its entire range of capabilities. So that means getting your own house in order.”
Regarding new technologies, he adds: “The reality is, in today’s market, you’ll still be dealing with half the entrance that will want to send you emails and use spreadsheets.”
In response, Eileen Herlihy, managing director and global head of Trading Services Sales at J.P. Morgan, adds: “Manual processes don’t perform well when you’ve got market volatility. And the more exception processes you have, the more that is going to hurt, especially in the period of market stress.”
Adnan Hussain, managing director and global head of treasury and securities lending at HSBC, highlighted the significant potential in regions like the Middle East and ASEAN, but cautioned that the diversity of these markets poses unique integration challenges.
"There are definitely opportunities, but the scale of those markets is enormous," he says. “Even when we think about the Middle East, while the countries might be fairly synonymous from the outside looking in, they are very individualistic and therefore do have very different infrastructures.”
Hussian believes the key could be introducing new technologies within these markets at an early stage, as they are building from scratch, to support wide adoption and better interoperability.
However, Bowman argued: "There is some adaptation you have to apply to those markets, which often creates manual processes and the less efficient processes when you start out, in order to get the market up and running for individual use cases.”
The panel also emphasised the appetite for intraday liquidity coming from emerging markets, specifically in Asia and Europe.
Towards the end of the discussion, the speakers shared their future predictions for the securities lending market.
“It may seem aspirational or utopic, but I think that ultimately, the industry will end up in a space where automation is assumed across the full lifecycle of the trade,” says Hussain. “However, the responsibility will still be around the analytics and the execution itself, as well as the maths and the mechanics around it.”
Wrapping up, Bowman notes: “There’s plenty of opportunity and solutions out there, but I think a lot of the change is not necessarily going to come as a big bang from the industry. It’s going to come from a lot of sweat and tears internally within organisations to get your own house working first, get your data clean and correct, and then you’ll be in a much stronger position to interact with the wider market.”
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