Technology continues to transform capital markets, with most banks (if not all) looking at how to further deploy technology in their business.
Technology offers the potential of increased speed, accuracy, efficiency, reduced risk, and additional capacity, as employees in post-trade processing are freed from manual repetitive tasks to focus on higher-value activities.
Darshan Chandarana, Fuad Faridi, Jared Moon, and Christina Schulz recently published an interesting article for McKinsey & Company, “How cognitive technologies are transforming capital markets.”
The authors of this article looked at cognitive technologies, applications and machines that perform tasks that previously required human interaction in the front-, middle- and back-office. They include Robotic Process Automation (RPA), machine learning, and natural language processing, which reduce the need for human input and increase efficiency.
Perhaps the most memorable part of the article, was McKinsey comparing the trade processing of eight banks in the cash equities business. They found that the bank with the highest level of post-trade automation processed four times more trades per middle- and back-office employee than the bank with the lowest.
As the authors rightly point out, many of these technologies are new, but as the price of hardware falls the case for their use will get stronger.
Our view is that cognitive technologies are clearly in vogue, but the challenge lies not in the technologies themselves, rather in their implementation.
We know first-hand that capturing and validating data inputs remains problematic, due to multiple data formats and sources. To resolve this problem, some of our bank clients have implemented Xceptor to capture, validate and enrich the data, then to send it in the required format to the RPA, which logs into legacy platforms and replicates user strokes to automate the rest of the process.
The complete article is worth reading at http://www.mckinsey.com/industries/financial-services/our-insights/cognitive-technologies-in-capital-markets