Core Transaction Processing is considered critical to clients, particularly with the history of perceived simplicity and automation of FX and Money Markets products. In general, clients seem to place greater emphasis on a Bank's ability to process and settle transactions without the need for communication, than on face-to-face relationships, reports a new survey by Z/Yen, the City-based Market Intelligence firm.

However, for many clients, Operational Performance, while an important part of the overall front-to-back service received from banks, is generally not seen as a key determining factor for new business. For FX in particular, Front Office driven criteria, e.g., pricing, execution and research, and strong inter-Firm relationships form the basis for most new business allocation. The provision of Credit Facilities is also a notable factor.

Not surprisingly, the clients rated confirmation timeliness & accuracy, settlement performance and static data maintenance as key operational processes that had to be watertight. However, the need for customer relationship management is growing with one fund manager commenting, "It's good that our banks and brokers have recognised the need for more client focus for FX. Why are they only doing it now though?"

A further key finding was that, unlike in securities processing, the clients were not pushing for greater STP in the post-trade process with few looking to implement new systems. New technology initiatives that were cited included: CLS third-party services, Misys CMS and Swift Confirmations.

In the ranking section of the survey, there was close competition with all banks having an overall rating of “satisfactory” or better, though there were some individual low scores, particularly for static data management. Overall, Morgan Stanley were ranked first for FX Core Transaction Processing and Goldman Sachs for FX Customer Management.

Jeremy Smith, Director of Financial Services at Z/Yen, said, “In the Interbank market, FX processing has been largely streamlined. For client trades however, there is definitely a need for further automation and this can only be achieved by both the banks and the clients working together.”

Z/Yen surveyed 51 leading Investment Managers and Corporates in the UK, Europe and the USA during 2004. The survey was commissioned by 10 leading banks, to gain an independent view of how their services are perceived and to help prioritise their clients’ customer service needs. The survey covered 9 benchmark categories including confirmation timeliness and accuracy, settlement performance, static data, customer service and relationship management.

A summary of results is available here.

Z/Yen specialises in risk/reward management, an innovative approach to improving organisational performance. Z/Yen’s clients include blue chip companies in banking, technology and professional services as well as charities and care organisations (see www.zyen.com).