Enhancing client service through automation

The financial services industry is navigating challenges on multiple fronts. 

Together with rising costs and risks, competition for client mandates is intensifying. Firms that are unable to adapt – or who remain wedded to manual processing and legacy technology – will probably struggle to survive.  

In the final article of our three-part series of insights on the subject of operational automation in post-trade, Taskize’s Helen Adair looks at how automation and the adoption of intelligent workflow solutions can help financial institutions thrive moving forward. 

Winning mandates is getting harder 

Across the bank, broker, and asset manager segments, the battle for client wallet share is getting fiercer.  

In the case of banks and brokers, their client pools are contracting, as more asset managers consolidate their businesses through M&A to achieve economies of scale. In addition, a number of asset managers and asset owners are also looking to optimise the counterparty relationships they maintain, so as to simplify their own operating models and reduce costs.  

Active asset managers are also feeling the squeeze from their underlying customer base, as more institutional investors gravitate towards lower cost passive funds, evidenced by recent data from Boston Consulting Group, showing that passive’s share of overall AUM has grown from 17% to 20% over the last five years, while active’s AUM share declined from 44% to 38%.

To win business in today’s crowded market, financial firms must differentiate themselves by providing clients with a seamless – and ideally fully digitalised - service offering.   

Legacy technology remains an obstacle 

Delivering a high-calibre service to clients will not be easy, given that so many financial institutions are running their operations on legacy technology, including mainframe architectures, Excel Spreadsheets and even COBOL.  

Legacy systems are problematic for several reasons.  

“Firstly, they are expensive to maintain as they often require frequent security patches and upgrades, impeding firms from investing in client-facing solutions. Equally, older systems may struggle to interoperate with some of the more modern or innovative technology platforms, depriving clients of a frictionless user experience,” said Adair. 

Take transaction life-cycle management, for example.   

“Without digitalisation, firms will not have proper visibility into what is happening in the trade lifecycle. Absent a centralised system, different teams will be collating and consolidating data in multiple files and formats, leading to errors and quality control issues. This is particularly problematic for trade affirmations, indexing and chasing. As trade volumes increase, these problems will only get worse,” commented Adair. 

With more markets, e.g. Europe, transitioning to T+1, this lack of automation could be badly exposed, if trade fails pick up, leading to losses and penalties under the EU’s Central Securities Depositories Regulation’s (CSDR) Settlement Discipline Regime (SDR).   

If banks, brokers and asset managers are unable to improve their settlement discipline, experts warn they could see clients shifting business elsewhere.  

Moving away from legacy 

To retain clients, firms need to make improvements to their technology infrastructure.  

“To begin with, firms need to automate as many of their core processes as possible, or even move some of them off premises into the cloud. Automation allows firms to deploy their operations people more efficiently, and focus on critical business activities, such as revenue generation and client relationship management,” noted Adair.  

As asset managers and banks look to automate their operations even further, many are starting to transition away from email towards collaboration platforms and workflow functionality tools, such as those offered by Taskize.   

“Through the adoption of collaboration platforms and workflow functionality solutions, firms can eliminate the need for email and other manual interventions. This allows them to consolidate multiple workstreams within their organisation, giving them aggregated views and better insights and end-to-end audit trails into their operations,” explained Adair.  

A single, consolidated view of trade operations, for instance, will give firms greater, real-time visibility, allowing them to effectively navigate market changes, i.e. the transition to T+1, and ultimately deliver an excellent client service.    

“The ability to have deeper analytics and insights, enabled through Taskize’s platform, into settlement patterns and trends will be important for firms when T+1 takes shape in Europe. This will help firms improve their matching rates,” highlighted Adair.  

Those financial institutions currently using Taskize are reaping the benefits.  

According to a Euroclear survey, 97% of firms said they are happy when contacting Euroclear through Taskize, versus just 56% who said the same when corresponding via email. Research also shows that 80% of agent banks have now migrated their systems onto Taskize, of which 92% reported having greater control when scaling back duplication efforts.  

A further 100% said they receive better alerts and notifications on Taskize, reducing the risk of missing critical updates.  A staggering 100% also noted that transparency is much improved on Taskize, meaning users benefit from having a reduced number of touchpoints and improved resolution times.  Overall resolution times – when deploying Taskize - have fallen by 70% from 3.5 days to 1 day, allowing clients to strengthen their service offerings.  

If financial institutions are to grow their businesses in this ultra-competitive market, then they need to be fully automated and digitalised.