Blog: Why Velocimetrics has released a new solution for payments tracking – VMX Payments
When we launched Velocimetrics almost 6 years ago, with a team whose experience, at this point in time, firmly resided in building successful trading systems for large investment banks, we didn’t expect that Velocimetrics would attract interest from banks operating payment platforms. We initially developed Velocimetrics to help front-office traders, middle-office support teams and trading venues understand the performance of orders and trades as they traversed complex trading environments.
Velocimetrics was able to identify driver relationships between the monitored orders, trades and market data ticks, and tie all this information together. This enabled the hop-by-hop and end-to-end performance of any given trade to be examined and compared using statistical analysis techniques, and complete trading flows to be rapidly reconstructed. Users could be alerted in real-time to latency outliers and emerging issues, and have at their fingertips the analysis needed to not only instantly pinpoint the issue’s exact location but also immediately quantify how an issue had impacted their firm’s clients and business.
It turned out that what we had developed was a very flexible, business-agnostic solution and whilst it was successfully gaining traction amongst the investment banking, regional banking and trading venue communities, we were starting to realise that the fundamentals of this technology also offered significant potential for banks operating payment platforms.
Last year following a very detailed and competitive RFP process, we successfully deployed our first custom built payments processing solution with a leading global provider. Through this engagement and the knowledge and experience we had continued to build through relationships with other firms active in this space, it was starting to become increasingly apparent that many long-established banks offering payment platforms were facing a common set of challenges. And with the huge amount of industry change currently taking place, including the call for faster payments, growing demand for new payment models, disruptive providers setting up shop and new regulatory requirements, for many, getting to grips with these endemic issues was starting to prove critical.
Ultimately, one of the biggest challenges facing these banks is that their processing environments have become so complex. Having evolved organically, many now are comprised of an intricate mesh of legacy solutions with enhancements that have been bolted on as client and regulatory needs have emerged, third party technologies have been added, and duplicate systems and processes have been inherited through merger activities. As I discussed in a recent blog, because these systems frequently operate in silos and firms often only have system-by-system or process-by-process monitoring solutions in place, it can be near enough impossible to accurately predict how a change to one of these systems might impact another.
This can result in software updates or system enhancements generating high profile technical outages that are quickly blasted across Twitter feeds by disgruntled customers. Managing this complexity can significantly impact a firm’s ability to innovate. It can also mean that it is difficult to identify which systems are actually redundant and could be removed to simplify the whole process – as ultimately fewer moving parts means fewer things to go wrong. Additionally, according to some industry insiders I have spoken to, the maintenance costs associated with just keeping these shows on the road can eat up almost 80% of available budget.
This complexity issue is amplified by the many ways in which payments can be received, the complicated paths and check points they need to pass through internally and the many ways in which they can then exit the bank. Add to that the differing rules and regulations of the various jurisdictions in which the payments systems must operate.
As firms often monitor their systems verses the payments themselves, when an outage occurs they can find it difficult to quickly determine which payments were in the impacted system at the time and the clients to which they belong. So proactively managing the experience of impacted clients, by advising them as to which of their payments have been delayed, and by how long, can prove quite arduous.
In the event of system failure, gaining any insight into the details of affected payments is pretty much impossible, as the system is, er, down! Additionally, payments entering difficult states requiring manual repair can be slow to identify, resulting in SLA breaches that had operational teams known about earlier could have been avoided. Independent business tracking, provided by systems like Velocimetrics, means that full real-time insight is available to speed the repair and recovery processes.
Because of the siloed nature of these systems, payments are typically allocated different identifiers by different systems as they move through the processing environment. This can make finding missing payments and tracing their entire processing path a time-consuming nightmare.
Essentially, these challenges are not that dissimilar to those that we had built Velocimetrics to overcome in the trading space. It wasn’t orders, trades and market data ticks that needed monitoring this time, but data relating to payments. It wasn’t complex algo engines, smart-order routers and trading gateways that the data was moving across, but various payment systems. However, the users still wanted to gain a real-time understanding of what was happening across their complex infrastructures and the interdependencies that existed.
These users needed to trace payments from the moment they entered these intricate environments to their final point of posting. They wanted to be able to detect issues with these payments immediately; for instance payments that hadn’t yet completed processing but were quickly approaching their cutoff time, so they could be investigated and SLA breaches avoided. They also wanted to reconstruct the path taken by a payment so they could diagnose issues, rapidly find missing payments using a common ID and quickly respond to client queries. Finally, just as with trading, when an issue occurred, they wanted to be able to immediately quantify the client and business impact – just this time the business was getting transactions paid versus trades completed.
Yes the timeframes differed, we weren’t talking nanoseconds here, but as payments operational staff are increasingly required to make immediate decisions, gaining this information in a timely and actionable manner still proved critical.
Earlier this year we started to build VMX Payments to help payment providers achieve these very things, and we are pleased with the results. To do this we took the core Velocimetrics functionality and built a series of new features designed to address the specific requirements of the payments process. We are now pleased to announce the launch of this enhanced solution.
Contrary to common belief, Velocimetrics was never built to support firms in the race to zero latency. Yes it does this and for many firms does this very well. But Velocimetrics was ultimately designed to help firms better understand what is happening across sometimes incredibly complex environments and how system and processing issues are impacting critical business success factors. It’s in these types of business situations, be they trading or payment environments, that the Velocimetrics technology can really excel.
To understand how VMX Payments can support the payments process please visit www.velocimetrics.com/solutions/vmx-payments. In my next blog I’ll explain in detail the specific features we built on top of the core Velocimetrics functionality to enable VMX Payments to effectively support the particular requirements of banks operating payment platforms.