Transforming trade data: how to tap its analytics potential

For investment banks, a consolidated cloud-based trade data management service could prove the key not only to much greater cost-efficiency and lower risk in delivering regulatory compliance, but also to unlocking actionable business intelligence about performance gaps and missed market opportunities. Mike Bagguley, former COO of Barclays International and now a board advisor to Inforalgo, urges financial institutions to be bolder in their data-based ambitions

July 22, 2019 | Gresham Technologies

For wholesale banking institutions, trade reporting might appear to be little more than a painful and costly burden. But what if a consolidated, cloud-based approach to trade reporting could also serve as the basis for unprecedented business analysis and insight?

In retail banking and credit card provision, as indeed in many other consumer-facing industries, organisations already routinely combine transaction records with customer data for deeper analysis. This helps them to spot trends in customer activity, and determine where their most profitable business is coming from. Conversely, it can help them spot poorly performing sectors of the market and accounts which are much less profitable.

Armed with these insights, organisations are able to target their marketing and sales activities more precisely, to win more of the business they really want. They can also provide useful feedback to product development teams, to help inspire more attractive propositions for customers which the business has previously struggled to reach or convert. Such activity also aligns well with organisations’ commitment to better business conduct and improved customer outcomes.

In investment banking, this level of sophistication has been absent historically. For instance, an institution is unlikely to be able to see, at a glance, how they are performing with insurance companies in France, or whether they are performing poorly with car manufacturers in Germany, relative to the opportunity.

That’s because management teams lack a clear line of sight across all of their current and historic trading and client activity. This is down to how they have procured their IT systems. Commonly, each outlay on a data technology or service has been a passive response to new regulatory demands, or a necessary preparation for expansion of investment activities. For each new requirement, financial institutions have put in yet another new function-specific IT system, or signed up to yet another specialist third-party service, copying across a set of trade data for it to work with – in the process creating costly new silos.

Trade data management transitions to the cloud

It is widely accepted that a piecemeal approach to trade data treatment is unsustainable. Firstly, it is costing banks significant amounts to manage scores of different IT systems and/or third-party services, and to keep updating them each time regulatory requirements move on again – costs which they can ill afford, especially in this continued lull in investment markets’ performance.

Secondly, all of these unwieldy trade data management activities are adding very little, if any, value to the business. And, each time trade data is transposed to another departmental system or third-party service party, there is a rising threat of errors or out-of-date information creeping in. Meanwhile, the need for reconciliations – a complex activity, at best – grows exponentially.

Of more strategic significance, having disparate systems all managing trade data separately–without any central oversight or coordination–is preventing organisations from improving business performance and conduct.

In the cloud, however, financial institutions have an opportunity to do things very differently. They can entertain the possibility of consolidating complete, clean, definitive trade records to a single source, accessible via a single central online hub, to serve multiple different use cases. And, in the process, they can address many of the challenges they currently face.

For instance, it becomes possible to streamline a whole range of critical business processes, including regulatory reporting to trading and market surveillance, around a credible, approved master data set – as captured at the time of transaction.

They can also start to appreciate and exploit the bigger picture emerging from all of their trade activity, to optimise trade performance and profit and become smarter about how they target resources.

The power of richer data connections

To become better-run businesses, financial institutions need a more detailed picture across all of their activities, certainly. This also means being able to combine trade flows with other data sources, such as revenue and profit performance data, client relationship management records and even client electronic communications.

Although, increasingly, banks are using cloud-based software tools like to collate and organise client information, there needs to be a link between this data and actual trade records. Data consolidation and inter-systems integration is the key to 360-degree business visibility, so that institutions can act in more targeted ways to deliver more of the results they need.

The key is to aim to achieve all of this as automatically as possible, without having to recreate or copy data each time teams want to use the data in new ways – whether that’s to support trade surveillance, regulatory reporting, or deeper business analysis. Open systems connected in the cloud, and drawing on definitive, approved master data, maximise the options while removing the need for huge, unwieldy and costly IT estates. This can mean savings which could run into millions annually, while putting the business in a far better position strategically going forward, thanks to the more rounded trading and customer account intelligence it can now draw on.

Over time, we are likely to see more wholesale banking institutions realise the value of consolidating all of their trade data management and reporting via a single, optimised cloud-based service, so they can rationalise their out-of-control IT estates, and use their data in new, high-impact ways. And it all starts with cloud-based trade data consolidation.

About the author

Formerly COO at Barclays International and a respected financial markets industry leader, Mike Bagguley is a board advisor to Inforalgo. Inforalgo’s smart data solutions for Capital Markets allow wholesale banks and broker-dealers to rationalise their technology and operating platforms, significantly reduce risk and costs in their trading businesses, and efficiently pursue the full spectrum of market opportunities.



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