London-based Duco wins the best buy-side reconciliation platform category at this year’s Buy-Side Technology Awards, following up its success in the same category last year. Its success has come on the back of its low-touch, self-service reconciliation platform, Duco Cube, offering clients reduced implementation timeframes without the need for heavy IT deployments.
When it comes to reconciliation services, one of the challenges with automation has been that many on the buy side are still reliant on spreadsheets. According to Duco’s CEO, Christian Nentwich, what has held back automation is that traditional systems were generally built for specific instruments, like cash and equities. Such systems struggle when it comes to anything that doesn’t fit the traditional model, for instance the automation of derivatives such as contracts for difference (CFDs). Since Duco’s platform is not specific to any one asset class, it has been particularly successful in weaning buy-side firms off spreadsheets.
Nentwich points out that reconciliation services are normally heavily reliant on technology, which tends to make implementations long-winded, complex and expensive. “With Duco, it is live in 24 hours,” he says. “Duco Cube uses machine learning, it learns about the data, it adapts itself to the situation and is used by operations people.”
One of the challenges for buy-side firms is that there is a lot of duplication of processes between them and their fund administrators, according to Nentwich. Duco removes the need for its clients to rely on multiple systems. “It is the same reconciliation process repeated in multiple places,” says Nentwich. “There are lots of emails flying around, and we are able to bring everybody onto one view and cut some of that down.”
Duco is currently investing heavily in research and development and frequently releases upgrades to the platform. This quarter, it is rolling out a set of machine-learning components to its clients; Nentwich sees significant potential around the automation of exception workflows underpinned by machine learning. “That is where we are headed,” he says.
In his view, the implementation of Mifid II has been “very positive” for Duco. “In the case of Mifid II, when you have systems that normally match maybe 12 columns, suddenly you’re having to match over a 100 and you’re having to enrich it with HR information like trader’s personal details,” he says. “The more complex, the better for us. We invest a lot in handling complexity well, and I would say for us as a business, it has actually brought us a lot of new clients in the last year.”
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