March 7, 2012 – For more than two decades, a fundamental goal of securities firms and banks has been to achieve “straight-through” processing of transactions. No paper, from start to finish.
That has now been largely, albeit not completely, achieved. And Patrick Walsh, global head, client technology services, Brown Brothers Harriman, said at the SWIFT Operations Forum that it’s time to start thinking of a second generation of automation that adds intelligence to transactions and integrates information from any different sources to make business operations not just more efficient, but handle more tasks.
The financial services industry needs straight-through processing that is “highly intelligent, highly integrated and allows us to innovate,’’ he said.
Different firms, for instance, may rely on multiple suppliers for different critical services, such as custody, fund administration and middle office functions.
With more intelligent, integrated processing, firms would be able to regard one given transaction as part of a larger transaction or series of transactions. They could keep track of collateral requirements in the process as well as corporate actions that need to be recognized, for proper custody of assets. And all this could be automatically taken into account in a fund’s tax records, he said.
Driving the need for intelligent processing of transactions straight through to end results like financial, tax or operating records is “growing complexity in our business,’’ he said, including increasing regulation, more complex assets and multi-legged transactions.
The industry is still struggling as well with how to deal with repurchase agreements, swaps and various forms of derivatives and bank loans.
That increases the need for a more intelligent, integrated and innovative form of straight-through processing that Walsh dubbed iSTP.
He didn’t specify exactly what the “I” should stand for. But one provider of financial services back in 2005 defined its iSTP managed service as “immediate straight-through processing.”
This story originally appeared at Securities Technology Monitor.
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