Jerald Seti, vice president, financial services product management at OpenLink Financial (OLF), says that firms want fewer barriers separating middle and back offices. Seti also reflects upon OLF’s third trophy for Best Middle-to-Back-Office Integration Solution via the awards competition.
(Editor’s Note: A trend is underway to eliminate the walls and silos separating middle and back offices at securities firms because they inhibit the flow of information, says Jerald Seti, vice president, financial services product management at OpenLink Financial (OLF). FTF News recently checked in with Seti about OLF’s third consecutive win for Best Middle-to-Back-Office Integration Solution via the FTF News Technology Innovation Awards competition. Seti manages the financial services product management roadmap for OLF, and oversees back-office solutions.)
Jerald Seti, vice president, OLF
Q: In your opinion, how would you describe the current state of middle-to-back office securities operations?
A: As always, security and data encryption remain the number one concern.
Our main observation on the current state of opportunities within this space is that collateral management is still largely dependent on spreadsheets.
There is a tremendous need to have collateral management optimized across different business functions (cleared and non-cleared margin, capital requirements, etc.).
Straight-through-processing as a solution is becoming increasingly desirable, and is being taken to the next level with robotics and AI [artificial intelligence].
Q: What have been the benefits of improved middle-to-back office integration?
A: The potential benefits of improved middle-to-back office integration include:
- Cost savings / operational efficiencies;
- Elimination of silos that confine processes and interactions to the detriment of firm performance;
- Ability to centralize processing in centers of excellence;
- More timely information disseminated throughout organizations (bank & custody balances, liquidity management);
- More effective use of securities as collateral with optimization software;
- Single source of truth, consistent trade and market data reporting from risk, through settlements and accounting;
- Overall quality assurance;
- And improved regulatory compliance
Q: Were there any middle-to-back office developments in 2016 that justified OpenLink’s longtime approach to this area of securities operations?
A: The following developments in 2016 served as justification to OpenLink’s long-time approach:
- The need for increased readiness for future volatility;
- Better interactions and reporting for regulators;
- Necessity for security transformation through enhanced securities lending operations;
- Several years of margin pressures were forcing firms to look for ways to cut costs;
- Scarcity of quality assets were forcing firms to be more efficient with how they leveraged the securities they had available in inventory;
- And changing and new regulations required systems that were agile enough to provide the required regulatory reporting by new jurisdictions.
Q: What is happening to the walls separating front, middle and back-office operations? Is there more cooperation ahead or less?
A: The trend is for elimination of walls and silos between middle and back office, which inhibit the flow of information.
More cooperation will lie ahead as firms are looking to capture the benefits mentioned throughout, and regulatory reporting relies on consistency of data reporting throughout the organization.
Q: What more needs to be done to improve interactions between middle- and back-office operations?
A: The following three items are key changes that would dramatically improve interactions between middle and back office operations:
- Migration away from [Microsoft’s spreadsheet] Excel as a primary tool. Benefits include speed, scale, security, reliability and adherence to regulatory pressures;
- The need to widen the use of data warehouses to broaden access to key information so that all parties are using the same single source of truth for reporting and analysis;
- And the need to standardize data models and aggregate the reporting and monitoring of risk with an end-to-end perspective.
