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Doing More with Trade Data: The Value of Deeper Analytical Insights

By Mike Bagguley, Board Advisor, Inforalgo

In their pursuit of greater cost-efficiency, financial institutions are turning to new, streamlined ways to manage and report on trade data – with additional benefits. Witha definitive single data set from which everything else flows, market operators gain a clear line of sight into their fuller business performance,which they can use to drive better business decision-making. Mike Bagguley, former COO of Barclays International and now a board advisor to Inforalgo, assesses the potential

Mike Bagguley

Mike Bagguley

As regulators continue to demand more proactive surveillance of trading conduct and more detailed and immediate trade reporting, wholesale banking institutions are realising that there may be an opportunity here – to create something that adds value for the business.

Certainly, the traditional piecemeal approach to trade data treatment is unsustainable. Collating and preparing data for regulatory compliance purposes has become a costly and full-time job. Similarly, the IT systems on which all of this depends are unwieldy, complex and expensive to maintain. As financial organisations take action to address this spiralling situation, by consolidating their trade data management in the cloud and creating high-quality trade records, they will find that they are sitting ona valuable business resource that could be put to use in a number of additional ways.

Consumer inspiration

In retail banking and credit card provision, as indeed in many other consumer-facing industries, organisations already routinely combine transaction records with customer data for deeper analysis. It helps them to spot trends in customer activity, and determine where their most profitable business is coming from. Conversely, it can help them spot poorly performing sectors of the market and accounts which are much less profitable. Armed with these insights, organisations are able to target their promotional activities more precisely, to win more of the business they really want.

They can also provide useful feedback to product development teams, to help inspire more attractive propositions for customers which the business has previously struggled to reach or convert. Such activity also aligns well with organisations’ commitment to better business conduct and improved customer outcomes.

In investment banking, institutions would benefit greatly from equivalent targeting sophistication, but historically the supporting insights have been lacking.Teams are unlikely to be able to see, at a glance,how the organisation has fared with insurance companies in France, for instance, or whether it might be performing poorly with car manufacturers in Germany relative to the opportunity.

This kind of visibility would require a clear line of sight across all of their current and historic trading and client activity. Yet the way they have procured IT systems has not been conducive to this. Commonly, financial institutions have tended to put in a new function-specific IT system,or sign up to yet another specialist third-party service, each time there has been a new business or regulatory requirement, copying across a set of trade data for it to work with. In the process, they have created costly new information silos.

All of this is set to change for the better, however.

Clarity in the cloud

Today, cloud-based software services are accepted as being a secure and viable alternative to managing business applications internally. This means financial institutions can now entertain the possibility of consolidating complete, clean, definitive trade records to a single source, accessible via a single central online hub. One that might serve multiple different use cases.

With a credible, live master data set – the approved, reported version of the trade –  it becomes possible to streamline a whole range of critical business processes, from regulatory reporting to trading and market surveillance, to detailed business analytics. This paves the way for Capital Markets operators to appreciate and exploit the bigger picture emerging from all of their trade activity, and be smarter about the opportunities they pursue and in the way they target their resources.

Data consolidation: delivering the bigger picture

To become better-run businesses, financial institutions need a more detailed picture across all of their activities. This in turn requires that they are able to integrate trade flows with other data sources, such as revenue and profit performance data, client relationship management records and even client electronic communications (important for comprehensive trade surveillance/detecting insider trading or market manipulation).

Yet this facility has eluded wholesale banking until now. Although, increasingly, institutions are using online software tools like to collate and organise client information, there needs to be a link between this data and actual trade records.

Using a cloud-based trade data store maximises the options for integration and onward actions from a single, integrated, credible, current master data source – one that spans all asset classes and has links back to fuller client account information, and broader business performance data. Cloud-hosting also makes it easy for all teams to access the insights they want to look at from wherever they are in the organisation, anywhere in the world.

The ideal is that everything, including compliance, risk, business analysis, and even end-of-day financial reporting, can all be managed effortlessly using the same clean, certified and up-to-date data.

Taking a centralised, cloud-based approach to IT and data management, meanwhile, means banks can achieve all of this without the continued need for huge, unwieldy and costly IT estates – resulting in savings which could run into millions, annually.

Over time, we are likely to see more institutions realise the value of consolidating all of their trade data management and reporting via a single, optimised cloud-based service, so they can rationalise their out-of-control IT estates, and use their data in new, high-impact ways. Certainly, the future for trade data management will be simpler, leaner, smarter.

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