BNP Paribas Securities Service has adopted a new artificial intelligence (AI) tool for trade processing, in a bid to further automate middle- and back-office services through new technology.
BNP Paribas will begin implementing Smart Chaser, which uses machine learning and predictive analysis to predict the likelihood that a trade will not “match” automatically and will require manual intervention.
The bank claims it will be able to predict the likelihood of a delayed “trade matching”, ascertain the contributors to the delay and suggest a pre-designed temple to be sent by the middle-office operation team to clients.
“We estimate that up to 30% of the trades processed on behalf of asset managers require manual intervention in order to complete. This is an industry-wide challenge which is often caused by counterparties holding mismatching data for the same trade,” said Thomas Durif, global head of middle-office products, BNP Paribas Securities Services.
“Using predictive analysis, Smart Chaser will analyse historical data to identify patterns in trades that have required manual intervention in the past and proactively warn clients and their brokers on their live trading activity so they can take action promptly. We are already making good progress, having reached around 98% prediction accuracy.”
Trade matching, which involves the comparison of trade details between the client and its broker, is a key part of middle-office processes. Matching must be performed in a timely manner or there is a risk the trade may require manual intervention, or in some cases, fail.
The use of AI and machine learning is increasingly becoming commonplace within the securities services, particularly for tasks which are often repetitive and can be enhanced through greater speed and efficiency.
Speaking to Global Custodian, Satvinder Singh, global head of securities services for Deutsche Bank, believes AI is taking centre stage as clients see the value that can be leveraged to boost efficiency.
“In the securities services business, engagement with AI is not driven by an abstract interest in the way they operate, but in their potential for enhanced analysis, delivery and security of data,” said Singh.
“AI can help streamline operations by helping clients find operational improvements in their processes. It can also help detect patterns in market data that can help in investment decision making for our clients’ client.”