The most important Collateral Management event of the year is happening, November 9th-10th, in New York City in the New York Marriott.
Our wide-ranging speakers cover the most vital topics in Collateral Management, including Diana Shapiro of Citi, Christian Sabella, associate director of US SEC, and Lis Hadingham of CloudMargin.
Hot Topics Interview with Lis Hadingham, Managing Director of CloudMargin.
Lis answered our questions on the future of Collateral.
Q. What trends do you see that are shaping the type of collateral management solutions needed for the future?
In the world of collateral management, we see three main trends occurring that will lead to the development of new solutions in the industry: 1.) a move to the cloud, 2.) increased control, and 3.) integration with the front office.
Move to the cloud: With the cost constraints and constant regulatory changes, financial firms are looking for a robust solution at a fraction of the cost. The cloud offers one instance of software to many, which drastically reduces the cost than with premise solutions. Why would any firm purchase something that’s more than double the cost if there is a better way? That’s why we’re seeing traction towards cloud-based solutions.
Faster implementation times: The cloud also gives customers quicker implementation and an easier way of on-boarding by given more control to the customer. The current environment is simply too inflexible and takes too long and firms need solutions fast. Many onboardings are standard and can take as little as two weeks. The more complex and robust implementations take around 4 - 8 weeks. Also, as cloud based products develop, more and more control is given to the customer and their onboarding will be in their hands to where they can set the pace as fast as they want.
Integration with front office: Systems will start to extract collateral and margin data into usable analytics for the front office, helping traders make better decisions because they will know the entire cost of a trade. With a cloud-based solution that continues to develop best-in-breed partnerships like CloudMargin, clients will have out-of-the-box access to technologies across the entire collateral management life cycle: pre-trade analytics to settlement.
Q. Is a transparent financial world really a positive thing?
Yes! Transparency could help buyside institutions a lot. Transparent pricing results in better planning for firms’ business budgets. In addition, at least 80% of the processes performed in collateral management are standard across the industry. More transparency across the industry will only make the operations and collateral management processing easier.
Q. 2017 was considered to be the year of integration and standardization. What does the future hold? 2018 will be the year of ...... (?)
I think the effort to build a foundation in the new era of regulation and change will continue through 2018. The industry have incorrectly estimated how quickly automation can be achieved. There is still a lot to be done in terms of defining new processes, building skillsets, and implementing new technology. What was interesting though, is that at many of the industry conferences last year, there was a lot of talk about optimization. I think that there are very few early adopters of enhanced solutions that may be ready to look at optimization. In reality, the focus is still operational automation, knowing your inventory, etc. From there firms can truly optimize and then look to build upon the foundation they are still building now.
We hope to see you at the conference.