Claims – a topical issue in recent days in the world of politics! But claims of a different kind are under increased scrutiny in the financial industry right now. The drive for post-trade process efficiency has always been important. In the new age of COVID-19, as financial institutions struggle with increased volumes due to market volatility, and margins continue to erode, optimizing the claims process takes on a whole new imperative.
In the asset servicing universe, whether it’s coupon or dividend claims on corporate action transactions, or interest claims on failed settlements, ensuring recovery of the monies due requires time-consuming investigation, communication, and reconciliation. Where settlements fail over a prolonged period costs rack up, prompting firms to re-examine client relationships negatively impacting the bottom line.
Apart from the service, efficiency, cost and control outcomes, bank executives are increasingly focused on promoting greater balance sheet management optimization, in particular by reducing risk-weighted assets (RWA). They are demanding more innovative ways for operations to actively contribute to trading revenue growth. More effective communication channels in the form of real-time collaboration are also considered key to achieving this. And, for those struggling with their RWA going in the wrong direction, or experiencing securities lending revenue reduction owing to eroding counterparty trading confidence over asset servicing key dates, claims transformation is high on the agenda.
In our experience, organizations that have undertaken claims transformation have not only seen improved STP rates and fewer exceptions but also RWA reduction, a higher ISF ranking and increased lending revenue. This level of differentiation in terms of market standing ultimately determines where business is won or lost.