SmartStream Technologies: Sensing the Pulse of Banking Industry

Haytham Kaddoura, CEO Despite joining the conference call after just having landed in London, Haytham Kaddoura sounded full of energy and excitement ready to share his views on the current environment clouding the banking industry, and how SmartStream Technologies is ‘time and again’ proving itself to be the indomitable player in the space. Kaddoura, who possesses more than two decades of experience in investment advisory, asset management, and corporate restructuring, believes that success requires staying close to clients and listening to what they really want. It’s no surprise that he makes these periodic visits to SmartStream’s global offices, a ritual that allows him to achieve the much-needed coherence between evolving challenges faced by banks and the solutions and services offered by SmartStream.

A Step Closer to Clients

Their practice of listening to clients has definitely given SmartStream an edge over its competitors today. “Unlike other vendors that offer ‘made to measure’ solutions in the marketplace, SmartStream has always remained unique in allowing its customers to form and shape the solution according to their requirements,” says Kaddoura. For instance, when Raiffeisen Bank International (RBI), an Austrian banking group, decided to take a proactive approach to combat the impact of The Basel Committee on Banking Supervision’s release—‘Principles for Sound Liquidity Risk Management and Supervision,’ SmartStream was their choice of vendor. The bank chose SmartStream’s cash and liquidity reporting solution, a solution that resulted from the collaboration between SmartStream’s product development team in Vienna and the bank’s treasury domain experts. The solution, Corona Cash and Liquidity, provides best practices for its customers and offers real-time data from external sources.

With this solution, RBI was provided with a centralized view of all cash positions throughout the bank, aiding cash management, forecasting, and trading needs. Also, the solution successfully generated complete reports incorporating central bank deposits—enabling the client to allocate funds and to feed details into these reports.

Specialist Knowledge and Innovative Culture

Specialist knowledge and a culture of innovation support the unprecedented growth of SmartStream, as evidenced by its impressive growth year after year. The global managed services provider has without misstep predicted the challenges some of the world’s top banks will face and built solutions to meet these challenges.

SmartStream has always remained unique in allowing its customers to form and shape the solution according to their requirements

SmartStream understands that as the ecosystem of local and international regulations is constantly changing, banks are striving to adhere to these restrictions while still focusing on optimizing their processes, control their costs, and most importantly, keep their stakeholders satisfied.

SmartStream’s Corona is one of the company’s answers to increasing straight-through processing rates whilst fulfilling reporting and compliance needs. An example would be the Corona family of solutions which are made scalable so they can handle millions of transactions per day, whether the chosen solution is hosted on-premise or managed in the cloud. Additionally, its shorter implementation time ensures minimum disruption of the organization’s daily operations.

A recent proof of Corona’s growing demand is its implementation by “IT Solutions Austria,” the Austrian IT service provider for Erste Group, one of the largest financial services providers in Central and Eastern Europe. The client is confident the solution will help reduce the operational cost since its deployment requires minimal investment, time and effort and is proven to reduce user traffic related costs by as much as 40- 60 percent, depending on the individual organization’s mainframe contracts.

For banks, another way to realize considerable savings is to have an improved understanding, measurement, and optimization of how transaction fees are charged. The awareness around transaction fees and expense management is gaining momentum with SmartStream’s Fees and Expense Management solution which addresses the need to drive savings and enhance profitability. It enables clients to strategically manage their variable expenses by using an end-to-end automated process that computes expenses accurately across high volumes of transactional information and apportioning fees.

RDU: Offering the Much Needed Data Accuracy

A ‘partner of choice’ for some of the major banks across the globe today, SmartStream has traversed a journey of rapid organic growth and made a number of strategic acquisitions as well. Recently, in collaboration with Goldman Sachs, JPMorgan Chase, and Morgan Stanley, SmartStream created the SmartStream Reference Data Utility, originally known as Securities Product Reference Data (SPReD).

The industry has long recognized that one of the primary reasons for transaction failure is faulty reference data.
SmartStream’s Reference Data Utility (RDU) provides capabilities to mutualize operations and technology cost and ensures that firms get a complete, accurate, and timely supply of information to support their business decision making and facilitate regulatory compliance. The clients of this utility benefit from the savings and operational improvements as it enables the consumers of the data to incorporate best practices and individual control.

Established as the first industry utility based on the principles of market commonality, collaboration, and contribution, SmartStream’s RDU is a shared service model. It manages data holistically across legal entity, security, instrument, corporate action, and pricing details, promoting common fixes to data processing across the instrument lifecycle and the events that originate and change data.

"Our approach guarantees that the client’s data is fit-for-purpose and consistent"

The RDU manages the complete data workflow, from sourcing and validation to enrichment and cross-referencing of information. The service utilizes SmartStream’s proven, market-leading data management service and is unique in its ability to offer multi-tenant architecture, full auditing capabilities, and customer-defined sourcing. “Cleansing best practices, which are applied, continually evolve through the network effect of data processing mutualization to achieve the highest possible data quality and timeliness. This approach guarantees that the client’s data is fit-for-purpose and consistent,” says Kaddoura.

This new notion of reference data as a utility substantiates the fact that SmartStream is constantly growing and evolving its solutions to meet the needs of the complex modern financial markets. By facilitating the achievement of processing mutualization, reduction in operational risk, and heightened service quality within the reference data management space, SmartStream’s RDU has truly positioned itself as the frontrunner in the industry. Julie Harris, Managing Director and head of Operations Data Quality Management at Goldman Sachs, expresses, “We are pleased to partner with SmartStream and our industry peers on an innovative product that combines emerging technology with a common utility model. We believe this solution presents great value for our organization and the broader industry.” The utility now operates 24/7 to support its client base from across the globe.

With more than 21 global offices, SmartStream has outpaced its competitors in the financial markets by a wide margin. Their ability to react to client, market, and regulatory changes through innovative solutions has earned SmartStream more than 70 of the world’s top 100 banks alongside the world’s leading asset managers, custodians, and broker dealers. The company is planning to further its investment in technology by expanding its operations in Poland. “I am incredibly proud of all that has been accomplished at SmartStream over the last several years and look forward to continue positioning the company at the forefront of the industry,” added Kaddoura.

SmartStream Technologies News

SmartStream the first to launch a comprehensive intraday liquidity stress testing on demand solution

SmartStream Technologies, the financial Transaction Lifecycle Management (TLM®) solutions provider, today announced the launch of its Intraday Liquidity Stress Testing module, part of the TLM Cash and Liquidity Management suite of products. Carrying out a stress test and running it can take up to eight weeks, with the new module it allows banks to run this in minutes “ which is essential for refining the scenario, making real-time decisions, reporting and risk analysis.

SmartStream commissioned research from Baringa Partners, a management consultancy firm, and the report highlighted that if a bank could cut its liquidity buffer by $6bn, it may save as much as $50m per year. There is a clear need for banks to carry out stress testing to improve profitability and reduce operational effort to meet the regulatory requirements. With these considerations in mind, SmartStream developed the new module to provide stress test results immediately. The product is available as standalone or via the cloud. The pandemic and the turbulent conditions have made this type of stress testing more essential and re-enforced the value of such a solution to banks.

Nadeem Shamim, Head of Cash and Liquidity, SmartStream, states: The research carried out by Baringa Partners in conjunction with the development of our new module has created a great deal of interest in the market, we are currently having many detailed conversations with banks where the ability of a comprehensive solution with the flexibility of testing different stress scenarios is critical. Also the current turmoil in the market has had a big impact on a banks liquidity “ so the ability to model the potential impact of such occurrences is no longer simply a regulatory box-ticking exercise, but a matter of self-protection and even of survival for many financial institutions.

Simon Gray, Director, Baringa Partners, says: The research identifies that its no longer about meeting intraday liquidity reporting requirements, banks are now seeing value in stress testing and having the tools to carry out complex scenarios with a high degree of accuracy for making more informed decisions. In addition, the findings revealed that it has gone from being a regulatory burden to creating a stringent, active framework within which to manage liquidity risk. By simplifying the complex and time-consuming testing process, SmartStreams solution allows banks to run a variety of stress scenarios in a short space of time, which is critical.

SmartStream further protects payment systems in achieving industry PCI-DSS status

SmartStream Technologies, the financial Transaction Lifecycle Management (TLM®) solutions provider, today announced certification for PCI-DSS (Payment Card Industry Data Security Standard) version 3.2.1, level 1 (the highest level). This provides additional reassurance to serve card and digital payments customers and process personal identifiable information across the world.

The PCI-DSS certification is one of the most trusted, demanded and in a lot of cases mandatory qualifications for solutions partners. SmartStreams reconciliations platform and OnDemand (SaaS) services using its flagship solutions: TLM Reconciliations, TLM Aurora and SmartStream Air (Artificial Intelligence Reconciliations), have been certified at the highest level of security standards. This also includes the departments, staff, locations and processes which supports the complete service model.

The PCI Security Standards Councils mission is to enhance global payment account data security by developing standards and supporting services that drive education, awareness, and effective implementation by stakeholders - supporting the needs of the global payments industry. For SmartStream, achieving PCI-DSS status involved demonstrating high levels of security across the whole organisation, covering domains such as physical security, personnel security, fraud control mechanisms, IT & data security and data privacy - on a fully monitored business environment.

Haytham Kaddoura, CEO, SmartStream, states: The process was rigorous, it included revisiting numerous policies, testing security solutions and implementing new processes, it was a collaborative team effort across all of the business units. This requirement was driven by our clients and it is now critical and demanded by all financial institutions. It simply gives us the hallmark of trust, which is especially important in these current times, with data security and fraud detection being so high on the corporate agenda.

SmartStream develops derivatives component for MiFID SI Regime to meet September deadline

London - SmartStream Technologies, the financial Reference Data Utility (RDU) solutions provider, today announced derivatives is supported in its Systematic Internaliser (SI) Registry service, to help clients meet the Markets in Financial Instruments Directive II (MiFID II) deadline of September 15, 2020. This allows trading counterparties to identify who is responsible for reporting trades in general, but also the most complex part of the SI Regime which now includes derivatives.

Financial institutions are highly reliant on good quality reference data to ensure they can successfully trade electronically, automate their operations and report accurately to the regulators. The MiFID II SI Regime for derivatives will be the most challenging component which needs to handle a very complex classification scheme. The service further strengthens SmartStreams partnership with the APA (Approved Publication Arrangements) community as the RDU continues to be the sole distributor of the SI Registry, which provides SI status across equity, fixed income and derivative instruments.

The SI registry is a market initiative where SmartStream in collaboration with a group of APAs, including: Bloomberg, Deutsche Boerse, MarketAxess, TRADEcho and Tradeweb, enable SIs to register, the financial instruments for which they are providing SI services, in a centralised database.

Additionally, the new API (Application Programming Interface) service takes the complexity out of traversing between an ISIN and the associated Classes of Financial Instruments Approach (COFIA) SI status for derivatives “ this will drastically simplify a customers ability to identify counterparty SI status, allowing for faster adoption and ultimately compliance of the upcoming regulation.

Linda Coffman, Executive Vice President, SmartStream RDU, states: The derivatives component represents the last phase of the MiFID II SI Regime to be rolled out by the SmartStream RDU development team. We are excited to once again be able to partner with the industry through the APA community and to provide a helping hand to our clients in meeting all of the necessary requirements come September 15.

The MiFID II SI Regime mandates that the SI test is conducted differently depending on the asset class. For derivatives, the SI determination is based on the volume of trades across a class of instruments, and not just at the ISIN level. To meet the September deadline firms will have to handle a complex ESMA classification scheme in order to be compliant.

SmartStream develops data observational learning alongside Tier 1 banks “ providing a 20% cost saving using AI

Haytham Kaddoura, CEO

London - SmartStream Technologies, the financial Transaction Lifecycle Management (TLM®) solutions provider, today launches Affinity in collaboration with Tier 1 banks - an Artificial Intelligence (AI) observational learning solution to meet the technical demands and business agility for operational data management and data quality processes.

SmartStream in partnership with the Tier 1 financial institutions has identified an integrated AI solution that can result in cost savings of as much as $2M per annum - bringing reconciliations into a new era, by increasing match rates and helping business users to cope with the vast volumes of data. This eagerly awaited technology has come out of the SmartStream Innovation Lab and marks 12 months since the launch of its first AI solution. Affinity is available in SmartStream Air (SmartStreams cloud native AI solution) and will be embedded into SmartStreams flagship reconciliations solutions. Banks will realise the benefits without any lengthy IT projects, it is supported in the cloud, as a fully managed service or it can be deployed with clients existing on-premise solutions.

Affinity AI observes the users actions and establishes its own understanding of how records correlate and it will assist the user to significantly reduce the time it takes for matching complex data sets. Once the neuronal network is trained, Affinity acts as a virtual user to support businesses dealing with large amounts of data - the more it observes, the more efficient it becomes, boosting matching rates - delivered to the end-user with high-quality results.

Andreas Burner, CIO, SmartStream, states: The banks have recognised that they need to roll out AI and machine learning technologies to realign resources, increase STP and optimise costs. Affinity outperforms matching rates of anything else available on the market today. Client projects have been very successful and they are estimating at least 20% cost savings for their reconciliation business. It is very gratifying that after 12 months of working with clients on our AI solutions, the technology has matured and we are now at a stage to deliver real value. In addition, we are currently starting five new feasibility studies to confirm AI business cases, the demand for new technology is huge and the team is extremely pleased to be partnering with our clients to make this happen.

SmartStream Technologies

San Jose, CA

Haytham Kaddoura, CEO

Provides volume insensitive, instrument agnostic STP solutions that deliver control to the transaction lifecycle

SmartStream Technologies