Posted: 10 May 2023 5 min. read

Accelerated Settlement - Cost Tooling to Improve Settlement Inefficiencies

As part of our T+1 series, in this blog we explore the tools and data techniques that can be leveraged to improve settlement efficiency.

Following the confirmed T+1 settlement changes that will take effect in the US and Canada in May 2024, there is a clear opportunity to modernise settlement processes. If executed optimally, this will support in driving the cost agenda in the securities business – so T+1 can be a golden opportunity for enhancements to infrastructure and activities.

By using the right tooling and data techniques market participants can give themselves a big advantage to get this right and capture the benefits available by:

  • Leveraging process mining capabilities and benchmarking data to extract, monitor, and analyse data and gain insights into end-to-end processes;
  • Integrating with comprehensive cost analysis, scrutinising costs associated with the settlement cycle and uncovering potential opportunities which could lead to cost efficiencies; and
  • Employing digital tools to enhance transparency over the settlements process, supporting data-driven decisions about how and where to improve the settlements process.

We believe T+1 can be a major driver of operational and technology efficiency in the securities industry if organisations use the right approaches, including those described above. And this is particularly important as it touches a number of functions for which it can be hard to develop a cost-based business case for improvement, due to the low-cost value trap of suboptimal processes on aged infrastructure.

We are ourselves investing in tooling to support our clients with this.

  • Cost Diagnostic Tool (CDT): This tool enables businesses to analyse vast quantities of obtainable data using a standardized approach. Then, by integrating the data with a service-level perspective of the operation, this process promptly enables the detection of inefficiencies related to processes and costs.
  • Digital Tooling Solutions: Over the past decade, AI solutions have advanced significantly, and readily available off-the-shelf solutions have become more prevalent. These solutions have successfully addressed process inefficiencies, enforced tighter controls, and automated many manual repetitive tasks. By leveraging the right digital tools such as Celonis & ServiceNow to process settlement data, businesses have been able to uncover patterns and trends, empowering them to make informed decisions and enhance their settlement operations.
  • Benchmark Data: We have utilized standardized methods to identify essential key performance indicators (KPIs) in processes, which has led to ease in comparing benchmark data and facilitated the implementation of targeted solutions to resolve problems.

We are happy to demo these tools and look forward to engaging in further discussions.

With the help of these tools and techniques, businesses can more effectively adapt to the accelerated T+1 settlement changes. To achieve the shortened settlement period, companies must evaluate their current infrastructure and tackle common challenges by implementing substantial changes to their business processes.

This now concludes our second blog as part of the T+1 series. We will continue to dive into the value that can be enabled and the challenges to be navigated in a T+1 environment. Stay tuned to hear more – and do reach out if you are interested in a more tailored discussion.

 

Authors:
    

 Rollo Burgess

 Director in Consulting

Charissa D'Cunha

Manager in Consulting

Bella Allan

Manager in Audit & Assurance

 
 

Pegi Ylli

Manager in Consulting

 

Alicia Harley Henriques

Senior Consultant in Consulting 

 

 

Author

Nina Gopal

Nina Gopal

Structural Reform Lead Partner

Nina is a Partner within Deloitte’s Banking & Securities team, and co-leads Deloitte’s structural reform proposition. Nina has worked extensively with large investment banks leading and supporting optimisation of their derivatives booking models in response to regulatory drivers. She also supports front office functions with business and operating model change. She has more than 15 years operational and management experience within Financial Services, focusing on the investment and global banking sector. Nina has in-depth knowledge of front office investment banking impacts through operations, product control and risk. Before joining Deloitte Nina spent 5 years in industry working for an investment bank and prior to that worked for a ‘Big-4’ consulting organisation, specialising in capital markets.