Straight Through to...What?
When I started writing about financial IT exactly four years ago this month, I was floored by the amount of acronyms and jargon that existed as compared to the retail banking sector. Everything seemingly has an acronym, and some of them seem forced, almost to the point of being asinine.
Then there's STP, which stands for straight-through processing (or Stone Temple Pilots, if you're a fan of alternative rock ─ and it is a simple, straightforward fact that Scott Weiland is the definition of a rock star, and "Core" was an absolute monster of an album.)
But back to financial IT. The term STP, while it makes sense at face value, gets thrown around about as much as the word "cloud" or the descriptors "seamless" and "creates efficiencies". STP is designed to ─ wait for it ─ create efficiencies by speeding up the process where two systems or platforms "talk" to one another by connecting them in a ─ again, wait for it ─ seamless fashion. Any IT architect should strive toward STP, but the acronym is used so much that it has lost its punch, if not also its meaning.
An exceeding number of press releases that come to my inbox throw the term around willy-nilly. But where STP holds real merit is in the areas of reconciliations and settlement.
This week I spoke with Omgeo's Rick Enfield, who is the executive director of product management of Omgeo's collateral and margin management solution, ProtoColl. On Wednesday, the industry utility announced partnerships with TriOptima and AcadiaSoft for collateral reconciliation and margin management.
In a release, Omgeo noted that they had linked "to leading providers to facilitate straight-through processing" and that this would allow users of ProtoColl to take true advantage of STP. This isn't just jargon ─ in Omgeo's case, it is what they have to provide as part of an industry service in order to survive.
Enfield has worked on both sides of the Street over the course of two decades, with stints at State Street, Signature Financial, Charles River, Asset Control and now Omgeo. So if anyone would know how best to describe straight-through processing, it's him.
"Straight-through processing means a lot of different things to a lot of different people," he says with a chuckle. "I have to laugh because we've been talking about this since the 90s."
He describes STP as the ability to reduce human touch into automated processes as much as possible, while still allowing for their intervention for exceptions management where you need a human's judgment.
"Computers are really fast, but they're really stupid," he says. "They do exactly what you tell them to do and they do it really fast. But if you tell them to do something wrong, all of a sudden, really quickly, you've got a lot of stuff going wrong."
I've argued in the past that definitions matter, whether for STP, or for cloud services versus outsourced services. As a journalist, my eyes roll when I hear a word or phrase wedged into a release just for the sake of having it included. But more importantly, so too do the eyes of the senior level technologists at asset managers.
Be direct. Be accurate. It is the most efficient way to seamlessly get the attention of a CTO.
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