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Straight Through Processing - Financial Services Institute

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					 Straight Through Processing




             Jeffrey Ball, CIO - ProEquities
Steve Krameisen, CTO – Advanced Equities Financial Corp
                                                          1
AGENDA
•   Financial Services Technology Trends
•   Straight Through Processing – Defined
•   Challenges
•   Solutions / Applications
•   Approach
•   Budget
•   Future of STP
•   Q&A

                                            2
Financial Services Industry Trends
• Reduce costs and do more with less
• Integrate delivery channels
• Improve time to market for new products
• Improve efficiency of internal and external
  regulatory reporting
• Provide a single view of the customer
• Transform the branch office into a more
  efficient sales office
                                                3
Industry Trends are Driving New
Business Priorities at Financial Firms
               Risk                  Channel        Distribution
            Mitigation   Emerging                                  Security
                                    Optimization   Management
                         Business                                  Threats
                         Segments




                                                                              4
Straight Through Processing (STP) –
Traditional Meaning
• Enables the entire Trade Process cycle
  electronically
   – Little to no manual intervention
   – Eliminates re-keying of information


• An efficient use of Computers for transaction
  processing


                                                  5
Straight Through Processing (STP) –
Broader Meaning
• Functionally link two or more systems, so
  that they transparently behave as “one” to
  the End User
•   STP Concepts are applied beyond Trade Execution
•   Improve Efficiencies – shorten processing cycles
•   Reduce Operational Risk
•   Minimize Operational Costs

                                                       6
Straight Through Processing
has become
“Process Improvement”



                              7
Straight Through Processing (STP) –
Benefits

•   Reduce Costs
•   Improved Business Processes
•   Improve ease of doing Business
•   Remain Competitive



                                      8
New Account Opening – Manual
Workflow




                               9
STP Example
New Account Opening
                BD New Account System
                  Account & Suitability
                     Online Capture
    Advisor /
                 Integration with Forms
     Branch
    Assistant                                                BD New Account
                                             Webservice to
                                                               “Gold Copy”
                                             Clearing Firm
                                                                 Account
                                                                Repository
                                                             Integration with
                                                              Clearing Firm




                                          Clearing Firm
                                 Automated Account Establishment
                                      Account Assignment
                                                                                10
STP Example – New Account
Opening / Fund Direct
1.   Branch input of information
2.   Local branch data storage
3.   Back Office data management
4.   STP Request to Fund
     Company returns Direct Fund
     Account Information
5.   Back Office establishes Direct
     Account
6.   Client signs electronically
     using Click-Wrap agreement in
     the branch
7.   Order Request routed and
     executed
8.   Branch receives complete
     account and order detail
9.   Client sees account and
     position online
                                      11
STP Challenges
• Requires meaningful review of and updates to
  existing business processes
• Processes must be measurable & controllable

• Involves integrating disparate systems

• Costs to implement
• Keeping it simple – minimizing complexity
                                                 12
STP (Process Improvement) Ideas
•   Trade Processing
•   Integrated New Account Opening
•   New Business Submission
•   Advisor or Employee On-boarding
•   Customer Service Requests
•   IT Help Desk
•   Sourcing / Procurement
•   Compliance material submission and review
                                                13
STP Approach
• Assess your existing Processes
   – Which should be focused in on?
   – Where are the bottlenecks?
   – Measure their effectiveness – quantitatively
   – Are their steps that can be automated?
• Improve your Processes
   – Study key relationships and dependencies
   – Implement measurements as part of the
     enhanced Process
                                                    14
STP Budget Components
• People Roles
  – IT Project Manager / Analyst, IT Quality
    Assurance, IT Developer / Integrator
  – Business Subject Matter Experts, Process
    Reengineer
  – Consultant – may be desirable if you invest in
    new Technology
• Software Licenses
• Hardware / Infrastructure
                                                     15
STP Budget Examples
• Small Automation Process – 0$ - $100K
  – No new or small Software Purchase
  – Leverage existing Technology like E-mail with
    some basic workflow
  – Leverage existing Relationships / Tools available
  – Example – Advisor to Head Office Service Request
    automation using Service Provider tools


                                                    16
STP Budget Examples
• Medium size STP initiative - $100K - $500K
  – May include new Software and Hardware
    Purchase
  – May Automate Process with multiple Business
    partners
  – Uses existing “utility” services
  – Example – Back Office Imaging Integration


                                                  17
STP Budget Examples
• Large Scale STP integrations - $500K +
  – Large new Software and Hardware purchases
  – Development of complex services not currently
    offered by the industry or your back office
  – Example – End to End Advisor Process Flow -
    Automated account opening, eSignature,
    integrated Rules Engine, upfront Compliance
    checks, account funding

                                                    18
The Future of STP
• Need to move to a Business Centric
  module from a Technology Centric Model
  – Technology is often not the problem, process
    is
  – Focus on the core value proposition you’re
    offering and seek to improve that proposition
• Stay in touch with the Industry and
  leverage what is available to you

                                                    19
Q&A




      20

				
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