SmartStream
found a way of incorporating key skills and knowledge into its matching engine, SmartStream then focused on another key area that consumes valuable time and money: exceptions management. “Quick onboarding is great and reducing manual matching is great, but then you have to look at where users spend most of their time: exceptions,” says MacDonald. “There are many key questions here – what labels and priority do you give an exception, what teams handle it, why might it be categorised as high risk? We can automate all of that and assign it to the right team, assign a priority and categorise and initiate workflows. All of that is driven by AI.” The functionality that MacDonald describes goes beyond the automation rules that all reconciliation systems already perform. The solution proposes attributes to new exceptions based on how users have applied exception attributes to previous exceptions that contain similar records. It essentially learns from past processes.
When showcased at Sibos in the second half of 2022, the solution generated extremely positive responses from potential users.
“Clients all want to be more efficient,” MacDonald says. “This is a more complex problem than we have solved in the past with AI, but the benefits are easy to understand. It is more complex because there are more moving parts involved and a more complex map you have to navigate.”
“Exceptions have so many different attributes and outcomes, so it is harder to work out the best possible process in a particular scenario,” MacDonald adds. “What labels should it be given? Who should handle it? The time to investigate and categorise exceptions can be long, as you need to drill down into each one, get on the phone and chase the money. There is a huge cost benefit for the client if that can be automated.”
Eyes on the horizon
The exceptions management solution is, so far, a unique proposition for clients in the financial services sector. SmartStream is the first to market with this technology and the company remains firmly focused on developing this solution further, working in close collaboration with its core clients. “We are lucky to have such a huge client base, so we can see what their problems are and work with them,” MacDonald notes. “They are working with us on the exceptions management platform at the moment because our clients spend so much time working with exceptions. That knowledge is hard for them to replace, so they appreciate the ability to harness it and retain it with the system.” “The next step is certainly to further the exceptions management technology with AI, plug it into the
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overall workflow process and push the results into payment workflows,” he adds. “It is important for everything to be joined up, so we are looking across our systems to identify where a break in one system might have a knock-on effect downstream. Then we can work on how to flag that up and alert people to what the ultimate impact will be.” At every stage, AI is the key driver, but MacDonald understands that it can’t work in the shadows. Visibility is essential and must go hand-in-hand with SmartStream’s goal of embedding its solutions further into client systems. “We have a suite of post-trade solutions and we have a lot of data that we validate and reconcile, so if we can flag up problems early it gives our clients invaluable insights into what is going on with their processes,” he says. “But it is not about being monolithic. It is about helping to bridge the gaps and solve issues before they cause a big problem.”
Affi nity absorbs the learning carried out by employees and feeds it back into the main system.
“Lightning compresses the time and effort needed to create rules and controls, that is important because our clients want to build controls much quicker. This is a logical solution for AI, and it is actively used by many of our clients.”
SmartStream’s Innovation Lab is always looking forward to the next challenge, trying to solve problems before clients are even aware of them. At the same time, it is firmly focused on bringing clients along on the journey. The company is working hard to bring its many solutions together, embedding microservices such as SmartStream Air into the broader product portfolio, but also giving clients visibility and control as AI and ML become more embedded. “We are just scratching the surface of what can be done,” says MacDonald, arguing that clients can expect much more from the Innovation Lab in the near future. ●
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