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Araya Solomon is Head of Americas Financial Services for DXC Luxoft with 23+ years of consulting experience in APAC, EMIEA and AMS.
The asset management industry is likely to see a continued focus on automation and digitalization in the future of order management systems. This may include the use of artificial intelligence and machine learning to improve the efficiency and accuracy of trade execution, as well as the integration of blockchain technology to enhance transparency and security.
Additionally, there is a demand for real-time analysis of data providing better risk and portfolio management and the ability to cope with market changes. Overall, the future of order management systems in the asset management industry will likely prioritize technology-driven solutions that can improve performance and streamline processes.
Artificial Intelligence And Machine Learning
Artificial intelligence (AI) and machine learning (ML) can be leveraged in order management systems (OMS) integration in several ways:
• Algorithmic Trading: AI and ML can be used to create automated trading strategies that can quickly respond to market changes and execute trades with high accuracy.
• Portfolio Optimization: They can comb through a large cache of data, identifying patterns to support decision-making. This can be used to optimize portfolio performance and reduce risk.
• Risk Management: You can monitor and analyze real-time data to identify potential risks in the portfolio and make adjustments to mitigate them.
• Smart Order Routing: ML and AI can analyze market conditions and identify the best execution venues for trades.
• Compliance And Surveillance: AI and ML can be used to monitor trading activity and detect potential compliance issues, such as insider trading or market manipulation.
• Predictive Maintenance: They can also support ongoing maintenance of the ecosystem by analyzing the probability of failure based on usage patterns, alerting support teams and providing opportunities to proactively upgrade/repair before failures occur.
The integration of AI and ML in OMS can help asset management companies to improve trading performance, optimize portfolios, reduce risk and increase efficiency, as well as better monitor and analyze trading activity to detect potential compliance issues.
Blockchain technology can enhance transparency and security in order management systems (OMS) integration in several ways:
• Immutable Record Keeping: This can provide a high level of transparency and traceability for trades and other financial transactions.
• Smart Contracts: Smart contracts can be leveraged to automate the execution of trades and process financial transactions, which can improve efficiency and reduce the risk of errors.
• Decentralization: Blockchain can provide a higher level of security and resilience against hacking and other cyber threats.
• Interoperability: Blockchain technology enables the seamless integration of different systems, platforms and networks, which can enable OMS to connect and communicate with other systems in the financial ecosystem and provide transparency and security.
Overall, the integration of blockchain technology in OMS can provide a more secure and transparent system for managing orders, as well as automating trade execution, managing digital identities and enabling interoperability with other systems.
While many experts believe that the integration of OMS with technologies such as AI, ML and blockchain can enhance performance and streamline processes, it’s important to note that not everyone shares this view. Some experts argue that these technologies are still in the early stages of development, and their integration into OMS systems may not be fully realized for several years.
According to Veera Budhi at Membrane Labs, there are some key disadvantages to leveraging blockchain as well: “One solution doesn’t fit all requirements, and this is the same with blockchain technology. … This is not a straightforward ‘lift-and-shift’ type of solution.”
Additionally, there may be concerns about the cost and complexity of implementing these technologies, as well as the potential for unintended consequences, such as increased risk or reduced transparency.
Outsourcing OMS services to a package solution and service backed by external solutions can be an option for asset management companies as an alternative to developing solutions in-house. This approach can have several benefits, such as:
• Cost-Effectiveness: This can eliminate the need to invest in expensive infrastructure and resources.
• Scalability: It provides an opportunity to mutualize effort and cost—maintaining OMS solutions and the associated integration with the internal ecosystem, providing increased scalability on an as-needed basis.
• Access To Expertise: You may gain access to a team of experts who have specialized knowledge and experience in OMS and related technologies, such as AI, ML and blockchain.
• Reduced Risk: You could reduce the risk of errors and offload the technical and operational challenges to a vendor that specializes in support of OMS taking accountability and responsibility.
However, it’s important to note that outsourcing OMS services can also have its own challenges. For example, it can be difficult to find a provider that can meet the specific needs and requirements of the company. Additionally, there may be concerns about data security and privacy when outsourcing OMS services, and it’s important to choose a provider that has strong security and compliance measures in place. Overall, outsourcing OMS services can be an option for asset management companies, but it’s important to weigh the potential benefits and challenges and carefully select a reputable service provider.
The future of order management systems (OMS) in the asset management industry is likely to prioritize technology-driven solutions that can improve performance and streamline processes. The integration of AI, ML and blockchain technology can enhance transparency and security while improving real-time data analysis and risk management to help with decision-making.
However, it’s important to keep in mind that these technologies are still in the early stages of development, and their integration into OMS systems may not be fully realized for several years. Additionally, there may be concerns about the cost and complexity of implementing these technologies, as well as the potential for unintended consequences, such as increased risk or reduced transparency.
Another option is outsourcing OMS services to a package solution and service backed by human power, which can be more cost-effective and provide access to expertise. However, it’s important to weigh the potential benefits and challenges and carefully select a reputable service provider and associated operational risk.
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