Digital transformation in Banking and Capital Markets has been a ‘thing’
now for quite some years. This article outlines a practical approach for the
sector to accelerate that transformation.
Driven by the need to deal with a fixed cost base resulting from a
combination of; legacy platforms, increasing competitiveness and regulatory compliance,
the digital transformation of processes, workflows and content generation has
been a key topic of debate.
New technologies such as AI, machine learning, API connectivity etc.
have been great enablers of progress. The possibilities to increasingly digitise
and automate operational workflows bring increased efficiency, as well as revenue
generation and better client connectivity.
Capital markets, are (possibly incorrectly) seen by some to be a laggard
when compared to the finance sector as a whole which in itself is one of the
leading exponent industries for digital transformation. One can readily
understand why decision makers are reluctant to change proven manual processes
that support significant value transactions. However, the reality has been
somewhat different in that leading capital markets operators have driven
digitisation in order to increase competitiveness and build the business.
Many capital markets trades are consistent and follow logical patterns. Complexity
arises from both an externally changing environment and commercial
considerations which necessitate the involvement of numerous departments and
other third-party stakeholders. Well-designed and maintained software systems
can handle this. Nobody would argue that
IT systems are so much better at managing the required workflows to communicate
information to process a capital markets trade. From pre-trade drafts, through
approvals, execution and onwards to post-trade settlement. IT systems are
designed to manage consistency, efficiency and compliance covering content such
as; product information, legal documents and transactions and all the time
coordinating across multiple systems, departments and organisations.
So the digitisation argument is clear. Therefore, what should be the
steps for those wishing to take action?
Wholesale transition is complex and risky, so consider a step-change
approach such as that made possible by a document generation & process
automation solution from LPA called Capmatix. The system consists of modules
that can be used as building blocks within a banks digital setup. Each module
is highly configurable and fits seamlessly into an existing digital
By adopting one application (module), a bank has the opportunity to test
and gain practical experience through usage in order to make an objective
decision to adopt in other areas. Capmatix can be applied across a bank or any
other financial institution hence giving a long-term framework around one tool
integrating with the core system.
Digital transition is evolutionary and not revolutionary. New systems
must integrate and connect with existing systems until it becomes apparent that
it is safe to decommission any, no-longer desired, legacy systems.
Additionally, connections to the correct external parties (e.g. for certificate
issuance) is an integral feature. To avoid the risk of arriving at multiple
systems over time, Capmatix has the flexibility to generate any kind of
document and follow any prescribed process.
Many different documents (e.g. KIDs, Term sheets, CSAs, certificates or
other content such as the website) can have consistent elements. The system
ensures that when an element is created, that it is utilized across other
documents and content ensuring complete consistency. This extends to a very
granular level of permissioning and approvals for any variations. Furthermore, all
changes are ‘versioned’ therefore, system owners, users or auditors always know
who made any change, when and who approved it.
As Capmatix is a framework, designed, built and implemented by people
who understand banks and capital markets, the solution can be adopted over
time, driving cost savings by gradually enabling legacy systems to be
decommissioned. Process efficiency enables scale (achieving more with the same
resource) and mitigates risk-costs.
Hear What Our
A partnership with one of southern Europe’s largest banks to implement a
structured retail product
workflow processing system enabled
a ‘click to trade’ structured product sale with lower notionals than many
competitors. Competitiveness was further increased as system efficiencies meant
that clients could receive quotes in a matter of seconds.
A major global banking and financial services company approached LPA to
install a digital
client interaction tool to
improve regulatory compliance and client experience in corporate treasury
sales. The benefits were a reduction in processing time of over 80%. This meant
that revenue earning front office staff could complete administration for each
advisory much quicker driving higher revenues. Additionally, the bank were able
to manage a phased decommissioning of 9 legacy systems which were each replaced
by the Capmatix tool.
In order to automate
the issuance process of structured
retail products, a leading Northern European securities services provider and
Savings Bank asked LPA to apply the Capmatix solution. Low code software
enabled independent design of workflows, creation of new documents and addition
of new products. The fully compliant issuance process provided scalability
enabling the bank to become one of the leaders in their key markets.
One of Europe’s leading universal banks commenced a project with LPA to
configure a Post Trade system for Settlement Processing (Confirmation Generation &
Matching etc.). The resulting efficiency gains and decommissioning of legacy
systems provide a powerful client reference that can be shared at proposal
stage with further clients.
For more detail
on these client case studies and to learn about LPA and Capmatix,
contact us at any of these email addresses: