In brief
- The intersection of skills and business requirements is the foundation of effective software consulting.
- Transformation initiatives involve plotting areas for improvement, establishing a business case, and identifying standard tools and products for each project.
- Identifying the transformation area, plotting the project impact, and standardizing tools are essential steps to create a robust business case for system transformation, bringing benefits like simplifying workflows, improving STP rates, and automating processes.
The place where skills meet business requirements is the sweet spot for software consulting.
For example, let’s say you hire someone to process payments for your bank. Hiring this person may improve your internal processes, but it won’t transform them. Decisions like this should form part of your ops transformation strategy.
The transformation of your internal systems to improve efficiency or provide regulatory proof to make your bank more profitable are immediate benefits. Therefore, it’s no longer a technical problem, but a strategic one, and there’s no universal solution.
The following framework helps solve this problem to a certain extent. I’m convinced that tool standardization can bring about real system transformation.
Initiating transformation
The usual way to present management with strategic problems is via a business case. This business case should cover current challenges, proposed solutions and the benefits for the bank. It’s a bit like discussing a concept with your ops head over a cup of coffee, documenting it and then asking colleagues to help flesh out the idea.
Another way to look at it is that your bank leadership has already decided its priorities and budget for the year. Perhaps they want to spend more on regulatory projects and operational efficiency than ways to increase profitability. Based on their decisions (supported by business cases in due course), you can work out how to transform internal systems using readily available products. The breadth of your transformation depends on the budget and your team’s creativity.
That gives you two distinct ways to establish your business case. You can reinforce your case by using the project-impact matrix (see next section).
Identify the area to be transformed
Plotting the area of transformation is key to deciding which products to leverage or replace. For instance, you need to automate the back-office process of dispatching customer confirmations. In contrast, improving the latency of trade-booking applications is a front-office issue. And updating reconciliation is a back-office project which affects both front and middle offices.
Answering the following three questions will help focus your initiatives:
- What problem are you looking to solve?
- Which ops users will benefit from (and should be involved in) testing the project?
- What are the high-level project types and benefits?
Example: A leading bank wants to clear trades via a third-party broker on the London Clearing House (LCH) because bank management recognizes it will improve profitability.
Three answers:
- The bank’s problem is it wants to clear trades via a third-party clearer to improve operational efficiency. Currently, they settle trades bilaterally. This is a time-consuming and by no means foolproof process
- Ops users who book trades and reconcile them in the back office will benefit
- This project improves profitability which mainly impacts the front office, but also has work to do in the middle and back offices
The following is a high-level list of transformation areas and their main impact areas:
Project impact areas
Product standardization
Once you’ve understood your business case and enhanced it via the above project-impact matrix, the next step is to identify standard tools and products for each product type that can help you implement the project. Name each tool in the case study and detail the benefits.
Multiple out-of-the-box, integrated, cross-asset, post-trade processing platforms support front-, middle- and back-office activities in exchange-traded and OTC instruments. They support asset classes and the associated financial instruments across capital markets, investment management, central banking, risk management, clearing, collateral, treasury, and liquidity. The bank chooses a suitable application from the many on offer.
The above three steps will help you create a great business case for your transformation initiatives.
The benefits of standardization
- Migrate the bank’s business from its legacy system to out-of-the-box applications
- Simplify workflows and increase STP rates
- Automate confirmations and settlement-matching processes and cut operational costs
- Implement test automation
In summary, you can standardize industry-leading products within your bank using the above steps. Of course, you’ll need help from the system integrators.
Want to know more?
If you’d like to find out how Zoreza Global can help you transform a specific banking area, contact us!
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Yogesh Kshirsagar
Yogesh has 19 years of IT experience in banking and finance. Before joining Zoreza Global, he held leadership positions across the UK, United States, Singapore, Malaysia, and India, working with clients like Standard Chartered, Credit Suisse, American Express, CLSA, Natixis, Bank of Ireland and MUFG Securities. He specializes in regulatory reporting, anti-money laundering, client lifecycle management and investment banking. Yogesh also writes and speaks about these topics. Any spare time is spent with his daughter, jogging, reading or experimenting with new ideas.
