Company: Credit Lyonnais Securities Asia (CLSA)
Country: Hong Kong
Total employees: 1500
Employees in IT: 200
Dynamic IT initiatives:
- SOA enhancement and addition of business activity monitoring
- Complete IT restructuring and rewriting of key systems

Imagine a business where all transactions and engagements with customers and partners are all neatly programmed in prescribed processes and all incoming and outgoing activities are handled in a uniform and efficient manner. In a perfect world that's the exact model that IT organizations would love their company to operate under.

But the reality is that with any business there are unforeseen circumstances, new requirements and demands that cannot be handled by existing processes or systems. Inevitably that's where processes can slow as humans come in to provide analysis, rationalization and intelligent decision-making.

At Hong Kong-based investment bank, CLSA, process is everything. The firm lives and dies by its ability to process trades and queries at speed while complying with regulatory and client-specific demands. 

SOA just the beginning

Having gone through a series of enterprise application integration initiatives and being an early adopter of service-oriented architecture (SOA), CLSA has achieved an enviable level of straight through processing (STP) for much its trading operations. By automating the key processes for trades between front, middle and back office operations CLSA has led the industry in client delivery.

But the drive to continually improve its services to clients has not stopped there.

"While performing perfectly well we recognize that we cannot continue using the same applications and systems that in some cases were written more than 10 years ago," said T Rajah, CIO at CLSA. Trading conditions are very different today and will continue to change, he noted, "vendors and systems today are not able to react fast enough to meet the changing demands in the market."

The key change is the increasingly blurred line between front and back office operations. Traditional banking operations have utilized separate operations and systems to deal with customer-facing front office processes and back office settlements operations. "But today the transaction lifecycle is seen as one complete end to end operation and that requires a restructuring of front and back office operations," said Rajah.

The separation of operations can result in "hops" as orders are passed through the systems. While CLSA has achieved a high level of automation and STP, there is a clear need to push this to another level.

"We want to be able to deliver a seamless experience to our clients so that our process works in line with the client's own STP needs and expectations," Rajah added. With the increased regulatory requirements in each market and the varying needs of clients CLSA is being asked to demonstrate it can tailor its operations to fit the exact needs of its clients.

"Specifically when clients have concerns and exceptional requirements we want to show we can excel at addressing these concerns," said Rajah. While STP is in place, CLSA wants to develop a capability it terms straight through exception processing (STEP).

Extraordinary events

While processing of standard transactions is now seamless, the instances of non-standard requests and exceptions require manual intervention. Typically these exception cases come in via email which is picked up by any number of people. While a process is in place to handle these it is not systematic or as efficient as Rajah would like.

"We have a non-intelligent process for these cases that is divorced from the standard STP channels," Rajah noted. Once picked up these emails are then assigned manually to staff that are in a position to resolve each case. While the process is able to handle the current loads, improvements can be made to further automate this.

"Right now there is no standard way to track these cases and it's not transparent who is working on each case," said Rajah.

The new workflow engine involves a new integration platform and a set of business activity monitoring (BAM) tools from Tibco which replaces the previous WebMethods integration platform. The objective is to have all emails arrive in a common in-tray and then have the workflow engine analyze the data in each e-mail and intelligently assign tasks and allocate resources. Staff with the relevant skills and capacity can be immediately tasked with working on these exception cases.

This speeds up processing times by removing the initial manual sorting process as well as providing clear trail of traceable actions. Analysis of these cases can be performed with the BAM tools to provide further intelligence which can be used to create new workflows and models to handle transactions with similar data characteristics.

Intelligent intervention

Another scenario where this workflow engine is already improving performance is when a market like Japan approaches market close and trades in the queue have yet to be executed. The engine is able to identify those trades and automatically place them at the head of the queue and meet the market close deadline. This was a manual process before that required human intervention.

Rajah notes that by automating these exception processes the bank now has an end-to-end view of these transactions and enables traders to identify trends and develop best practices in handling these cases. "Staff can now be proactive in handling and solving client exceptions whereas before they had their hands full just to process these transactions."

"From receiving exceptions at the front office through to settlement we can measure the progress and apply key performance indicators which can be used by clients to compare performance," said Rajah.

Web services overhaul

Enabling all this is the integration engine from Tibco which is embedded across front and back office processes which have now been merged under one operation. The embedding of the platform from front to back and the addition of the BAM tools has dramatically speeded up transactions, observed Rajah.

"This has enabled us to take SOA to another level where not only services can be reworked but workflows can be dynamically changed and tasks intelligently assigned to best suited resources," he added.

CLSA's key application systems have been or are being rewritten in-house as the bank has found nothing in the market to fit its needs. Rajah admits having seen his team in the past as an integration operation of various vendor and self-written software packages, today he believes the team is much more focused on developing their own systems.

CLSA has also ramped up its IT resources with much of new headcount being based in its fully-owned offshore development base in Pune, India.

True client focus

This higher level of automation gives CLSA staff the time to strategically address new client needs as well as be able to monitor processes and make better decisions. The way workflows are modular and reusable means that configuring new products or services can be immediate.

Rajah notes that what his firm has done is applicable to a number of industries. Any high volume and transaction-intensive company such as logistics or trading firms will find this desirable. "In fact any business would want the ability to intelligently track incoming activities and be able to dynamically assign these to resources that have capacity and have the correct skill set to deal with each case," said Rajah. He noted that logistics players may even be ahead of the banks in this area due to their critical need for visibility.

"This dynamic allocation of resources provides the ability to monitor performance of any process or transaction and provide intelligence for further improvement," Rajah adds. "How could any company not want this level of performance management?"