With investors requiring faster response times from financial institutions, some firms have been challenged to meet the demands. To address these needs, IBM has launched two products to help private and investment banks improve the speed and efficiency of their order processing, trading and portfolio management systems.
The ability to speed investment decisions, understand their consequences and predict outcomes has never been more important for banks. Clients want to react swiftly to changing market conditions and are investing in a broader range of financial instruments. In the U.S., for example, the National Securities Clearing Corporation (NSCC) processed 20.8 billion equity, exchange-traded fund (ETF), corporate and municipal bond transactions in 2011, up 2 percent from 2010.
To manage the growth in transaction volumes, banks need more control over the orders they place for their clients and an accurate and reliable view into how investment portfolios are performing at any given time, according to IBM. Many banks today are trying to tackle these demands using a combination of legacy applications and manual, paper-based processes, leading to errors and redundancies, higher operational costs and longer time to market in responding to changing business requirements and new regulations.
Rather than having to make costly investments to fully replace their aged banking systems, the IBM products enable banks to rapidly transform and enhance the functionality of their front office applications with a single, integrated investment management system. According to IBM, the modular system streamlines and automates key processes from investment decision to order execution, and provides automatic portfolio rebalancing and performance monitoring.
"Growing regulatory demands and cost pressures, coupled with the complex and fast changing needs of their clients, require banks to be more agile and efficient in the way they operate and service their clients," said Likhit Wagle, global banking and financial markets leader for IBM Global Business Services, in a press release. "These solutions help banks automate key processes, gain greater visibility into portfolio performance, and allow advisors to spend less time on administrative tasks and more on relationship management with their clients."
Here are the details for the two products:
Order and Portfolio Management
This front-office solution seamlessly integrates a bank's order and portfolio management applications to provide a single, consolidated view of all client portfolios.
By eliminating manual or redundant processes, such as order entry or payment orders, the IBM solution enables completely paperless workflows from the moment the advisor initiates an order to processing of the order by the stock exchange, to final settlement by the bank. This capability reduces transaction time, costs and error rates. By minimizing time-consuming administrative workloads, investment advisors are able to focus more on higher value relationship management and client acquisition.
The tool can also automate the creation and execution of bulk orders for clients based on pre-defined investment and portfolio management decisions. The IBM solution handles all common financial instruments and order types, including securities, mutual funds and payments, from processing to settlement.
Portfolio Performance Monitoring
This web-based performance measurement application helps banks calculate and analyze on the fly the performance and risk exposure of investment portfolios and composites in detail. Unlike other performance measuring tools, which typically limit analyses to fixed time periods such as year-to-date, by quarter or by full year, the IBM solution enables banks to look at a portfolio's performance from any start date to any end date within the last two years without requiring overnight or batch data precalculations.
Investment advisors can access an overview of a single client’s assets, the portfolio’s performance in total and on an aggregated asset class level. The solution also calculates and tracks portfolio risk using standard deviation and other common risk calculations. Performance figures can be compared with benchmarks, composites or other client or model portfolios, all to inform better investment decisions.