Visual Aids in Analysing Treasury Operating Models (Part 2)

As we present these systemic ways of assessing and charting the current state (see previous blog here), we then move into a ‘deep dive’ review of the identified high-risk exposures. In the deep dive, we review and assess the potential impact of mitigation, performance, cost, and time to deliver. Simply put, measuring the client value creation for fixing up the current operating high-risk issues. Is it worth investment or not?

A final approach to using visuals is to present the capacity of the current treasury operating model, we conduct capacity breakdown analysis at an over AUM or trading, technology, trade processing productivity and asset class level.

 “Client’s value informative and accurate operating model capacity data and charts”

Some typical questions we need to answer on capacity include:

  • What is the current mix between flow and complex types of transactions split by asset class?
  • How do you measure flow business productivity?
  • How much of the time people spend is on manual tasks?
  • What instrument types are low touch versus high touch intervention?
  • How do you measure cash management and optimize balances versus liquidity of portfolios, strategy, and funds?
  • Does the investment operating model use IBOR creation or consumption for investment decision making? Multi sources or single golden data sources, or other and what frequency?
  • What are the daily position and transaction reconciliation and valuation volumes? And number of sources compared?
  • If on-prem or SaaS, what is the transaction processing capacity including cloud and support cost?
  • What is the number of daily cash margin movement and securities?
  • What is the location split per service and process? Onshore / offshore?
  • How much of the data handling is structured versus unstructured?
  • What would be the impact on headcount by expanding and introducing new instrument types?
  • How efficient is the client at processing each asset class, using STP rates from industry peers and same solution providers as a comparison?
  • How does the firm calculate, monitor, and validate clearing, PB fee commissions and table? If so, how much time to perform?
  • Static data: What is the capacity per day for new security set up including counterparty, entities, books and funds? Onshore, inhouse or outsource?
  • What is the capacity of the current system providers and service providers?
  • How is your existing solution provider rate card structured versus transaction capacity / tiering?
  • Does the client invest within digital asset classes? Or invest with fintech partners?
  • How many service capabilities and processes are system generated, versus human intervention?
  • How is pre- and post-trade compliance monitoring rules and data processing supported, technology or by data teams?

We use bar charts, and tables to enable comprehension of this data as it lends itself to numeric analysis. The detailed capacity breakdown analysis underpins the charts, but the visual aids make it quick to laser focus on the areas which require executive stakeholder attention.

At this stage we are pivoting the process of analysing the current state treasury operating model, with the opportunity to review potential alternative treasury operating solutions.

In my next blog post I’ll be talking about benchmarking, and how we provide a client with a way to compare their current treasury operating model with alternative solution options.

Photo by Amy Lister on Unsplash