MMF trading platform are evolving. If yours isn’t then should you worry?
Savvy MMF providers are digitalising their platforms to differentiate now while knowing they have the in built suspension to flex with the environment should it shift south again. This is great news for operations teams who need a purpose-built and automated solution to deliver the seamless, bespoke service they and their corporate customers deserve, writes Calastone’s President of Global Money Market Services, Ed Lopez
It seems like we are seeing the long awaited return of the money market funds. Perhaps this is the route back to yester-year given recent bank turmoil and the ongoing interest rate tightening. What is for certain is that MMFs are demonstrating they are still a safe haven for corporate cash. Yet, platform innovation is still widely believed to have lagged behind user expectations – even though customer expectations have changed a lot.
With such monetary volumes passing into MMFs you would expect a representative customer experience. For instance, intuitive financial interfaces have become part of our every day life, from smart phones to bank apps accommodating third party information. However, investors still need to do a lot of conscious shifting between systems to execute their cash strategies when using MMFs. This is without the need to then spend precious time asking: Has a trade been placed? Has it settled? Have funds been transferred? Have the details found their way into the TMS?
Checking, double-checking and quite a few telephone calls are still the norm. This all adds cost and risk – and requires heavy input from already stretched operations teams.
Delivering great customer service
For operations teams to deliver great service they need to be able to offer their products to corporate treasurer customers without them having to worry about trade visibility and manual processes.
They need platforms geared for efficiency and for change. In a world where margins are counted in a few basis points, manual processes add cost that can make trades unviable. As successive waves of regulation put up the cost of doing business, the ability to adapt quickly is essential. But with their current systems and processes, operations teams have little hope of achieving this.
At Calastone we see that the traditional platforms which fund providers use are not adapted to present-day expectations, nor to the varying needs and characteristics of corporate customers. This puts operations teams in a difficult position, having to resolve issues relating to inadequate systems.
For instance, teams find themselves having to ask their customers to wait much longer than is really necessary for upgrades to what are essentially legacy systems. Or having to explain why the slow processes of migration from system to system are causing outages that should have been consigned to history.
As a result of this, we then see funds having to tier and deprioritise some clients to concentrate on solving key issues around access, or trading and settlement, just at a time when they should be open for business to all potential customers. It’s a clear path to customer dissatisfaction.
A bespoke, customer-focussed solution
Fortunately, operations teams have an opportunity to give MMF investors a stand out experience versus their peer group using simple plug and play solutions that automat the trading process and enhance visibility throughout. Naturally, this would also make their own lives much easer by making up for a lack of system functionality they are continually asked to address.
With a single API connection, Calastone Money Market Services can offer a pain-free, real-time connectivity to all the counterparties necessary for automating the MMF process. This includes sending trades through seamless integration with any portal or investor system; automated payments and full transparency in settlements; automated reporting and cash sweeps. The result is reduced operational burden, less risk and more differentiation for funds in what has become a highly commodified market.
All this sits alongside client branding, bespoke features and a fast customer onboarding process, to enable class-leading operational support.
Operations teams at fund providers have the opportunity to build great relationships with their corporate customers, and win new clients, by ensuring a top-quality service to the end user. All it takes is the right technology.