A leading investment bank lacked a clearly defined business model for its entities across EMEA, APAC and the Americas. Its front and back offices generated varied P&L calculations, increasing reconciliation efforts. The bank’s balance sheets were bloated due to its U.K.-based broker-dealer entities operating as the risk management platform for all worldwide derivative trades, posing a systemic risk to the U.K. economy.
The bank sought a front-to-back redesign. To achieve its objectives of operational efficiency, streamlined processes and reduced operational risk, it partnered with Cognizant's capital markets technology experts on an enterprise-wide architectural transformation.
In 2013, the Prudential Regulation Authority (PRA) mandated the bank to scale back its broker-dealer balance sheet, implement controls over remote booking, and adopt a strategic target architecture with a streamlined data sourcing strategy. Our consultants worked with stakeholders from the bank’s trade management, risk management, operations and finance operations to define and develop an architectural design strategy.
As the first step, we devised design principles to build a new framework and establish clear ownership of any controls around business process workflows. These guidelines mandated that trade adjustments be performed in upstream platforms to avoid multiple enhancements in downstream functions. So, for example, operations would take ownership of the cash control model and publish the results of external cash control processes to the other functional areas, and trade-related data would be consumed from the same source to reduce data reconciliation efforts between the front and back offices.
After analyzing the bank’s existing architecture and identifying key controls, we received approval to deploy the new front-to-back design. We piloted the design at one of the bank’s APAC-based entities to support a portion of the migrated business from its UK-based entities. Following that success, the design was rolled out to all the bank’s broker-dealer entities.
The bank eliminated a number of redundant and inconsistent processes by adopting a clearly defined front-to-back data model. Decommissioning legacy applications, standardizing application interfaces and rolling out a robust control framework reduced its operational risks and support costs. The blueprint for the new infrastructure can be extended to support additional businesses and regional requirements as needed.
business/functional capabilities through strategic systems
data reconciliation effort between front and back offices
data management supported by golden sources
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