German lender Deutsche Bank recently launched a new service that works as an early warning system for settlement delays. The machine learning-based service works on anomaly detection features.
Good news for traders
Deutsche Bank has launched a new service for traders that provides them early warnings of settlement delays. This saves users from potential failures in their securities transactions. The service is powered by search technology firm Elastic. The bank will use the firm’s machine learning features alongside its anomaly detection features to help clients avoid big financial penalties. Clients have to comply with a hefty penalty due to settlement delays when the Settlement Discipline Regime (SDR) is implemented in February 2022.
The machine learning technology by Elastic will help the settlement platform of Deutsche Bank to shift its focus from real-time to forward-looking alerts. This will help proactively detect the in-flight transactions demanding actions and alert the team at the bank before it faces any issues.
Christopher Daniels, director of data products, securities services at Deutsche Bank,
“Our aim is to deliver a real shift in how markets view exception processing and to bring pre-trade performance to our post-trade operations. We can now detect transactions in real-time that previously would not be flagged as at-risk and divert our attention from the transactions that ostensibly appear to be at risk, but upon historical analysis have always matched in time to settle.”
How is the anomaly detection feature different?
The anomaly detection feature of Elastic takes the seasonality, market variation, and other dynamics into account to provide proactive alerts to the operational teams and dashboard with action queues that are driven by a large set of factors. These factors are often too big and complex to be processed manually but machine learning algorithms can complement this development and cover various dashboards like risk, control, settlement performance, and liquidity.
Daniels said that the bank is identifying the most crucial features that are most likely to cause a failed or late settlement.