COLUMN – OLAF RANSOME | How can you tell who has a good process, until volumes spike and systems fail? And how do you best fit a new product into existing practices in a scalable way? Olaf addresses two of today’s everyday headaches for operations pros in the wholesale markets.
Through a series of six column articles for PostTrade 360° in 2025, banking operations veteran Olaf Ransome digs into everyday operations – seeking to help us understand some of the everyday challenges and how to master them. Find Olaf’s articles indexed here.
Spoiler alert: no AI, no machine learning, not even a stablecoin. That is all headline grabbing stuff, yet down in the engine room, operations teams have got some over-full plates; everyday problems as they deal with the here and now.
What’s on the plate for Operations folk in wholesale markets right now? One of the advantages of advancing years is that in my network, I have some very senior, very experienced fellow operations professionals. One of them, industry veteran James Maxfield has moved from the bank side to the vendor side. After many years running large parts of wholesale banking operations, James is now the Chief Product Officer at Duco, whose software offering supports data automation, with unstructured data as a speciality. From that new vantage point, James has a front-seat talking to all the senior Ops folks and can engage with them based on his rich understanding of all things operations (find more detail on his view here).
James started our discussion by telling me how two themes stood out across his customer base: resilience and how to integrate the new with the old. The former was my 2024 theme for PostTrade 360°, so I smiled. Then James went on to talk about how firms are struggling with new products where existing operations are not set up to readily deal with all the new instruments and processes. How the new will fit in with the old is actually my theme for a series of discussion panels at the PostTrade 360° event in Stockholm in September. So I smiled again.
First, to things resilience. To misquote the Sage of Omaha: “Only when the volumes spike or the systems fail, do you discover who really has good operational processes”. The antics and announcements of the Donald have created huge amounts of volatility, which translates to big spikes in volumes. Two big challenges come with the volume. One is that even if everything works, the absolute number of exceptions is hard to master. The next is that many legacy systems are still batch process driven but are struggling with today’s volumes, so it is quite common for batch processing to “run long” which affects all the downstream processes.
So, “what happens next?” When I started my career at Salomon Brothers, there were at most two locations to co-ordinate: London and New York. By the time I arrived at Goldman Sachs in Zurich in 1989, we had Zurich plus New York and then Zurich plus London. Today, one could say we are at “peak outsourcing”; both in terms of geographical spread and the number of different companies involved in a process. Our more junior roles might be in India, so few if any folks in London, or Europe are learning the ropes. Often there are no senior folk in those outsourced locations.
“In simple terms, our resilience is driven by our control which is a function of people + processes + tools.”
James’ view was that those with the most resilient response plans are those where there is senior leadership close to the folks who have to do the grunt work, because when things do not go according to Plan A, leadership is needed, as too are well documented backup plans; if Plan A does not work, what do we do next, what did we do the last time this happened? James’ summary view of the level of operational capabilities was: “Perhaps 1 in 10 shops have their operations well configured in terms of resilience and ability to manage exceptional days.”
I live in Switzerland, a country that would win any planning Olympics and any train scheduling challenge. Through the heart of Switzerland runs the Gotthard tunnel – for trains and cars. If there is an incident with a train, the whole of Europe is affected. We have Plans B, C and D and they are regularly used. In simple terms, our resilience is driven by our control which is a function of people + processes + tools.
A bad situation to be in is that you rely on an operational superhero who has been around for years and reliably navigated past each and every crisis. My view on the ugly, the ok and best goes something like this:
• Ugly: a simple printed list or Excel spreadsheet with a list of tasks.
• OK: A printed list backed up by a great big pdf or Confluence page. Both of them searchable, but there is work to be done to find the right place. That is awkward when you are under pressure. And the whole thing does not have a really robust audit trail; when was the task completed, where is the evidence?
• Best: An on-line checklist, with a set of procedures and notes: “if at step 4, plan A does not work, click here for plan B, or here for C etc”. In other words, you have captured all you know in an immediately usable way. Steps ticked off as you go, the ability to add evidence of what you have done, audit trail of changes to the tasks and procedures, alarms for time sensitive tasks, as well as the ability to have periodic tasks pop-up when you need them, such as at month-end.
“A super process using Alteryx built by your summer intern is as risky as a spreadsheet built by last summer’s intern; optically attractive, but an operational time-bomb waiting to go off.”
James also talked about the general desire folks have to be using all the latest tools aka toys such as Alteryx. This is something which is particularly prevalent amongst younger folk. These new tools do indeed offer ways of doing things which us older folk find hard to imagine. That said, if indulgence of the new and shiny is at the expense of the basic discipline of dealing with the old and often boring, that is not good either. A super process using Alteryx built by your summer intern is as risky as a spreadsheet built by last summer’s intern; optically attractive, but an operational time-bomb waiting to go off!
James quoted an MD in Operations who joined him on a recent panel and talked about the need for “deliberate talent management”; where are the people, what tools are they using, how well are the processes documented?
James’ second theme is how challenging it is to work some of the new products into existing practices in some scalable way. Maybe you are easily able to process a crypto ETF but struggle with the hedge. Or how do you collect rents from shopping malls that are part of your private credit portfolio?
In the many years which both James and I have spent in our industry, there have been Herculean efforts to standardise messaging and data output so that we have structured data; ISO messages, FPML and FIX to name a few. Once we have structured data, we can automate processes both internally and across the industry to deal with the trade and asset servicing lifecycle: order flow, pricing, execution, confirmation, settlement and payment. In financial services, we are pretty effective; everyday millions of trades are settled, payments are made, and assets are serviced. I would say we are not that efficient; all that stuff we have to do to settle trades and make payment, and then service the assets, is quite complex and expensive to do.
On the topic of efficiency, James mentioned a lament he has heard frequently: “Why don’t we get some operational experts from somebody like Amazon? They are really good at efficient processes!” Easy to say, and it is undoubtedly true that a “fresh pair of eyes” could find some points in the process to optimise. However, in financial services, settling trades and making payments requires multi-lateral interaction. In matters books, Amazon can impose on the publisher or the shipping company; a series of bi-lateral negotiations and contracts. In banking two parties can agree to do something bi-laterally, such as netting, but we are limited unless we have structured data and standardised processes across the industry. Also, our products are often highly complex; a 10-year derivative might have 200 data points to manage.
In conclusion
Across the board, process resilience matters. That is as much about some part of a process breaking down, as it is about being able to manage volume spikes and especially about dealing with staff absences and turnover. If you have a team of five, with one away on holiday, without really good processes and tools, you will struggle if anybody is then sick. Resilience is a topic for regulators, so you will be asked to prove your capabilities. Or, or perhaps and, you will often find that your operations are in focus in a due diligence process to win new business; “well Fred the super-hero does all that” or “Here’s our Excel list” is not the most compelling story to hear. The tools are available to deliver that best practice I outlined above. There is no great reason not to be pro-active.
In new asset classes and markets, it is fairly likely that we will see increasing standardisation and more structured data. As we wait, patiently, for that evolution to take place, there are two ingredients which operations leaders might focus on: the process resilience mentioned above and the newer tools which can deal with lots of unstructured data. Those two do though go hand-in-hand. Yes, try out the new tools, but make sure that when after your summer intern has built some whizzy new process using the latest shiny, no code software and then goes back to college, you have documented how to use the tool and edit the processes.
