The start of 2018 has allowed some time to reflect on the immense change this industry has undergone, what that means for financial institutions, and how our platform can provide more value for the collateral management community in the year ahead.

Looking inward

In the evolution of the post-crisis landscape, we find ourselves at a time where the focus is shifting from external to internal challenges. External pressures, namely regulation, have taken up the most time and money since 2008. Now that the roll-out of these regulations is well underway globally, many firms are turning inward and realizing there is a lot to be done from an operational standpoint.

Achieving leaner operations is the now the focus area for the industry

New fintech firms and their game-changing technologies are continuing to emerge, and the business environment has become one where agility is key.

Despite the increased complexity, financial institutions continue to incorporate derivatives and collateralised products into their investment strategies. Therefore, we’re seeing a focus on not just the optimisation of their collateral usage, but also the efficiency of their end-to-end collateral margin call and settlement processes, alluding that the mantra will continue to be ‘do more with less’. This is not only a problem for the Operations and Collateral Management teams. Technology and Risk leaders, as well as the C-level of these financial firms of all sizes, will need to come together to achieve the cross-functional goal of leaner operations.

As the industry shifts focus inward, CloudMargin continues to evolve to meet the growing needs of the industry and help lead our clients to better embrace the future.

At the end of 2017, we began the process of researching and designing a new User Interface and Experience (UI/UX). This will serve as the foundation of our efforts to roll out new features, build new connectivity, and make safe, reliable and fully automated collateral management accessible to everyone in the industry.

Trends that indicate a new path forward

That being said, there are a few major trends that will likely impact the industry in the coming year:

  1. Automation will harmonise the front and back office.
  2. More proactive (versus reactive) approach to change.
  3. Industry consolidation and collaboration.

 

Here is more on these trends and how the new CloudMargin is evolving to address the challenges ahead:

1. Automation will drive harmonisation between the front and back office

The mass renegotiation exercise that the industry has just undergone with the uncleared margin regulations thus far has helped firms “clean up” outdated and operationally cumbersome practices. Repapering has enabled firms and their counterparties to commence the process of stripping away many legacy policies and procedures, resulting in a clearer path toward operational standardisation for both sell- and buy-side firms.

Now that standardisation is underway, firms have the time to think strategically about the digital transformation of their operations to meet the increased volume and velocity of margin activity. That standardisation not only sits in the back office but inherently benefits the front office as processes increasingly become automated. Through these new automated processes, data will be shared freely among internal teams.  We expect to see a dramatic reduction in challenges such as miscommunication between counterparties, resolution of disputes, and even doing business with counterparties still not compliant with regulations around the globe. This positive development will leave room for the people involved to focus on creating a better customer experience and more strategic approaches to challenges ahead. We believe firms – no matter their size – must embrace automation by focusing on the people, processes and implementation of best-in-breed technology to build an optimal solution for their firm.

The new CloudMargin will auto-scale and adapt to fit your needs.

CloudMargin’s new UI/UX will work for all firms, regardless of size, and is dynamic to meet increased volume of activity on demand. New screens will enable users to display and manage large sets of collateral agreement data based on needs, as well as configure the platform around different access levels for different types of users. CloudMargin’s off-the-shelf connection to upstream and downstream systems, as well as other best-in-breed technology solutions and market infrastructure, paves the way for clients to benefit immediately.

 

2. An agile and proactive approach will be key

Given all the challenges, it’s no surprise that firms will need to become more adaptable. Delayed regulatory deadlines have made it difficult for firms to develop long-term resource planning and forecasting, which have become a juggling act with other priorities. Everyone wants to be proactive, but that includes setting up teams and processes and implementing the right technology to make quicker decisions that roll up into a broader, firm-wide strategy. Financial firms that wish to gain the greatest competitive edge will start shifting to a proactive and agile approach.

Collateral management is a perfect place to migrate operations to the cloud in order to gain efficiencies, cost savings and automation that will thrust competitive companies into the future.

The new CloudMargin will allow for more automation and user controls.

CloudMargin is making it even easier for firms to focus their people on larger problems, by automating the process, giving better views of aggregated data and giving users an opportunity to configure the platform to their unique processes, including adding notifications and alerts to when the collateral manager needs to take an action. This will help our clients know the job is getting done securely and correctly through straight-through processing (STP) and full automation.

 

3. Market consolidation and partnerships are underway

We’re beginning to see a collective understanding across multiple market participants that there are common pain points that can be addressed with the right technology and connectivity. Working groups and conference panelists discuss automating business-as-usual collateral processes and improving STP. This will require, however, a collaboration across industry participants the likes of which we’ve never seen before. We believe the industry is ready.

This network approach requires building solutions that can be used by all, that are easily implemented, cost effective and inherently future-proof, and that can add efficiency savings and value straight away.

The new CloudMargin has unmatched connectivity via the cloud.

Because CloudMargin is a single instance multi-tenanted platform (aka hosted in the cloud), we have advantages in terms of connectivity that other platforms simply can’t achieve:

  • Real-time data updated by each participant.
  • Already-established connections to custodians, upstream and downstream technologies, and market data feeds to allow STP and automation from front to back office.
  • Access to aggregate data across multiple industry participants. This helps us identify the challenges and trends as they happen, allowing us to develop future solutions way ahead of the rest of the market.

 

In summary

Even with all the challenges and ways the industry is shifting, CloudMargin’s ethos of innovation is helping the collateral management community prepare for the future. This year, our new UI/UX will give our community a more streamlined and intuitive experience. It will give larger market participants the ability to manage larger data sets and multiple clients while saving significant cost, and smaller market participants the ability to mitigate risk and afford managing a few agreements in a way they’ve never been able to do before. As our broad range of clients see the CloudMargin platform grow and meet their needs in new and different ways, we are proud to help the industry establish a hub for collateral management. We’re glad you are joining us on this important journey.