EXCLUSIVE: “Changing the menu” – Ian Manocha, Gresham Technologies in “The Fintech Magazine”
Ian Manocha, CEO of Gresham Technologies plc, on why automating data processing is fundamental to reducing risk and improving customer experience
“Moving to the cloud doesn’t necessarily dissolve all the spaghetti — it moves it from one bowl to another.”
As an illustration of the tangle of complexities involved in executing asset trading today, Ian Manocha’s analogy is compelling. The managing director of financial markets software group Gresham Technologies plc (Gresham) makes it clear that having a capable data management system is key – whether it’s in the cloud or on-premises. Legacy software and manual processes are now hugely bypassed in an industry facing new asset classes, higher trading volumes from retail clients, globalisation, ongoing regulatory changes and richer datasets. That’s why Gresham offers offerings like Control, a data solution that simplifies tasks with end-to-end automation and artificially intelligent reconciliation matching.
Manocha says: “The simple process of making a trade in the front office creates a hell of a mess in the middle and back offices where they work with counterparties and report to regulators. “In a global investment bank, a trade ripples through hundreds of systems and processes and is written off to various databases before it finally settles. That spaghetti is messy and many mistakes are made – for a bank it is a risk, but for the consumer it is just complete frustration. So Gresham’s software fixes the problems – on the fly, as it’s all happening.”
An explosion in trading volumes from small investors via smartphone trading apps, encouraged by the rise of meme stocks like GameStop during the pandemic, is one reason why institutions need to break their reliance on manual reconciliation.
“The industry is moving in the US, most likely, to T+1 and that compression of the post-trade cycle will need a new generation of massively scalable reconciliation and control solutions.”
Figures from Bloomberg Intelligence show that small investors’ share of US stock trading by volume is approaching 25 per cent, compared to between 10 and 15 per cent a decade ago. But in the Far East, a survey by the World Federation of Exchanges found that on average about 60 percent of the volume exchanges handled was generated by the small investor, rising to 80 percent for some exchanges. The pressure is further increased by the emergence of new asset classes, such as cryptocurrencies, and capital markets firms that are diversifying after years of focusing on just one or a handful of sectors. Without a managed service model, institutions risk spending huge sums on staff to verify trades and at a time when staff shortages have already created an ultra-competitive hiring environment, says Manocha.
“When things get stressed, for example during the COVID period, data quality decreases and banks have more to fix on the back end,” he adds. “Often that means they have hundreds, and in some cases, thousands of people in some offshore center trying to figure out what went wrong and fix it.
“Therefore, if you can make even a small improvement in the proportion of automation of matching and direct processing, it makes a huge difference. Some of our customers process hundreds of millions of transactions through our technology every day. In some cases, data comes in from hundreds of different systems, external and internal.
“For large global banks, sometimes the regulatory complexity and security issues mean that reconciliation on terms is faster. It’s not necessarily where they want to be, but it solves problems in a reliable way.”
In May, Gresham announced that B2B payments firm Banking Circle had adopted its control solution via a cloud-based managed service for cash reconciliation. And in September, fund and investment manager WCM Investment Management said that since it began using Gresham’s managed services in 2019, it had more than tripled its funds under management, from $30 billion to $107 billion by the end of 2021. At the same time, it had reduced voting time by two-thirds. Faster reconciliation will be essential for the industry to halve the post-trade window from two days to one day or T+1. Manocha says:
“The industry is moving in the US, most likely, to T+1, and that compression of the post-trade cycle will need a new generation of massively scalable reconciliation and control solutions. We’re way ahead of the curve on that because we’re investing. “We have 70 developers who work with the software, who are more than any other player in this area. We have 270 customers, and they keep asking “hey, what about this?”
“So our goal is to build the team, build the technology, listen to what the customers are saying and then work with them, collaboratively, to develop what the industry needs.
This article was published in The Fintech Magazine issue 26, pages 57-58
