The pandemic has exposed some of the long-standing weaknesses of the post-trade business with market volatility and surges in trade volumes highlighting the lack of scalability and the operational risk posed by enduring manual processes. Overnight, contingency arrangements saw staff in some locations lacking equipment such as laptops or network infrastructure, further exposing the risks of manual and labour-intensive processes.
In its final article, the New Norm working group at the International Securities Services Association (ISSA) focuses on the topic of automation. It explores how a combination of the pandemic, the increased capabilities of modern technology and the digital revolution are finally forcing the securities services industry to focus on improving long-standing, and previously tolerated, manual processes both within individual firms and in partnership across the industry.
There are many potential areas of focus for securities services providers to consider when looking to improve automation capabilities. Challenges include having to deal with legacy systems, complex infrastructures, manual processes, physical hand-offs and organizational silos. All of these issues make automation a difficult and costly transformation journey. Below the working group has highlighted the current manual processes as well as the impact on the securities industry from this lack of automation.
A critical enabler for improved automation across the industry will be effective collaboration across the securities services industry. Collaboration will be necessary to encourage the creation and adoption of more industry tools and services. Engagement by all key participants will ensure that there are efficiency gains across the market, rather than the fragmentation that exists today.
Common standards need to be agreed, to both eliminate the need for costly bespoke integrations and to enable the broader industry to benefit. While regional standards continue to develop in some areas, there remains a challenge around global adoption.
Greater levels of standardization will provide common solutions around processing, as well as enabling consistent service provision to clients. Finally, firms should start to consider how they can collaborate to co-create technology solutions to common problems, to mutualise cost, limit inefficiencies and enable them to focus budget on growth areas.
ISSA’s New Norm WG will now close but its work will continue in another group focused on operational resilience.