Gresham Technologies Share Discussion Threads

[qantas] 11/3/2015 17:05

hxxp://treasurytoday.com/2015/03/the-trouble-with-excel-ttti

The trouble with Excel

The most common treasury technology is Excel; for the expert-user it is powerful, familiar and flexible. But for a large corporate trying to match and reconcile high volumes of accounts receivables transactions it is potentially a serious liability. What can be done about it?

Still using spreadsheets? Of course you are. In fact, more than half the respondents of a recent survey of global corporates said they do, to manage their general ledger or accounts receivable (AR) processes. The survey, commissioned by Gresham Computing, also revealed that amongst these spreadsheet users, 39% were taking three days or more to allocate and reconcile money received in their back office, with 16% taking up to a week to do this.

Despite the old world charm and familiarity of spreadsheets, if it is taking so much time to match and reconcile AR then potentially there will be a negative impact on working capital and forecasting processes. When dealing with high transaction volumes this could prove to be a significant risk.

Spreadsheets persist in the AR space regardless of the threat they may pose, simply because there is no suitable alternative, says Chris Errington, Gresham’s CEO. It has been estimated, he reports, that some companies complete up to 80% of their reconciliation activity manually using spreadsheets. True, in other financial functions – and in the right hands – Excel is a rapid and functional tool that is an attractive proposition, but it also has a number of well-known flaws. Not least of these is the lack of a standardised way of using it and locking down data to ensure it is doing exactly what you think it is doing, consistently.

For most large businesses, the natural technology to turn to for AR processes would be its ERP or accounting system, notes Errington. Whilst he feels these can be adequate tools for simple reconciliations – comparing one balance with another and then perhaps providing some functionality around resolving differences – their lack of specialisation is soon revealed. Most ERPs, he says, “often have an issue with complexity when dealing with volumes”. The main problem accounting systems have is in dealing with business process problems “that give rise to information that does not seem to correlate but should do”. These systems, he adds, are not generally able to deal with complex matching requirements where, for example, the cash coming into a bank account needs to match the sales invoice issued. “And when you can’t use these systems, you typically turn to Excel.”

The nub of the matter is the need to execute complex matching where the data being matched is non-standardised, states Errington. With few examples of truly standardised data anywhere in the corporate world (SWIFT messages perhaps coming closest), the balance of data is unfortunately likely to be of the non-standardised variety. In the context of AR, he notes that whilst bank receipts may exhibit similarities from bank to bank, there is no uniformity. For sales receipts, the data is almost entirely user-prescribed, even if a commonly deployed platform is used to create those invoices.

The problem being faced by companies seeking a solution that can help improve matching and reconciliation is that the process requires that system to be able to handle any source or form of data. “There are few software solutions able to accept such non-standardised data and deal with it efficiently,” notes Errington. The only real alternative, and by far the biggest competitor globally for such vendors, is of course Excel. It can import most forms of data “ready for the application of human intelligence to sort and process that data”. But, as discussed above, both the cost and risk factors rise commensurate with complexity and volume. Despite these drawbacks, letting go of spreadsheets will not be easy. “It’s a mind-set change, firstly to realise that there is something available, and secondly to then change the organisation to adopt and start controlling that part of the business in a more efficient way.”

Vendors in this space include AutoRek (Reconciliation Software), SunGard (IntelliMatch), Chesapeake (T-Recs) and Gresham (CTC). These firms typically target the asset management, investment banking and transaction banking community. The latter may white-label a solution: ANZ does so with Gresham’s CTC, for example. However, the barrier to uptake of specialist matching and reconciliations software is often the fact that Excel is, to all intents and purposes, free. “It’s only free to the point where you are accurate and get nothing wrong; the moment you get one thing wrong it is not free,” argues Errington.

But there is an even greater risk to consider, he warns: the knowledge of how a particular spreadsheet works is often tied up with the person who created it. A business running a $100m receivables ledger that is using Excel to control matching of sales invoices to bank receipts has a significant working capital risk exposure if the understanding of the macro that imports that data into Excel rests with just one person. The cash may not be allocated if for some reason that person is not available.

The use case for a specialist system is always the same, says Errington: “trying to control non-standardised transactions, to make less errors and to demonstrate that control and in the long-term to save money by replacing manual processes”. If such a system can remove much of the cost and risk of manual spreadsheet-based processing, it would at the very least be particularly useful for large corporates with the significant matching and reconciliation challenges commonly felt by the AR/AP functions of their captive shared service centres. Ultimately, he argues, “the more transactions are made, the less Excel can be used on an ongoing basis”.

[jadeticl3] 10/3/2015 16:11

I agree Mick Bell, in that this occurred to me as a possibility, but so did the opposite, which is why I am asking Qantas for a more expert opinion than my own!

[mick bell] 10/3/2015 14:05

It is not immediately obvious to me either jadeticl3 and I also felt
deflated when no punchline came.
However after pondering this for a while it occurred to me that CTC
would be a useful tool for cash-management and trade-finance businesses
and an RBS contract would obviously be a major one, perhaps one of the
expected major signings for 2014 that were postponed?
and which now, might not happen at all?

[jadeticl3] 10/3/2015 12:49

Well said amt. I kept on reading waiting for the punch line that never came. Is it so obvious the it does not need saying? Not to me it isn't. So Qantas, tell amt and me how this impacts on GHT, please, or why the lengthy post?

[amt] 10/3/2015 08:56

Any impact on Gresham ?

[qantas] 10/3/2015 08:21

hxxp://thefinanser.co.uk/fsclub/2015/03/after-the-glitch-rbs-closes-gts-or-how-a-global-bank-becomes-a-national-one.html

March 09, 2015

After the glitch, RBS closes GTS (or how a global bank becomes a national one)

I was surprised to see friend of the Financial Services Club Carole Berndt leave Royal Bank of Scotland (RBS) for Australian shores in January (actually Hong Kong with ANZ). Even though she’s an Aussie, the surprise was that Carole had only moved to RBS to shake up their Global Transaction Services (GTS) business the year before, having been specifically poached from Bank of America Merrill Lynch for the role.

Something was up and the radar wondered what?

That was answered the other day when RBS announced their 2014 results. Most of the headlines focused upon the news about the investment bank operations closing. The Financial Times reports that four out of five jobs will disappear in RBS’s Global Markets Division by 2019, amounting to over 14,000 job losses. The Guardian notes that this will impact overseas operations dramatically, as RBS pulls out of 25 of the 38 countries it currently has operations. But the most dramatic part for those of us in payments, is that RBS is closing its GTS operation.

Most of us wouldn’t have spotted this, as it wasn’t reported much. There was just one line hidden in the Wall Street Journal that gave it away: “As part of reducing its investment-banking footprint, RBS plans to sell or wind down its cash-management and trade-finance businesses outside of the U.K. and Ireland.”

The import of that line was lost on me until a few friends reached out and asked if I’d noticed what was going on. The low-down appears to be that McKinsey, or some other large consultancy, have taken a close look at all RBS operations and structures and have determined that there’s no money to be made in transaction services. I've assumed it is McKinsey, as that is the bank's preferred shredder these days, but it may be another for all I know.

That comes as a surprise as many of us, me included, thought that the ABN AMRO global payments processing capability was the jewel in the crown. How times have changed.

So here’s what I’m hearing.

RBS had this big consulting company look at all their operations and, when it came to transaction services, they found that this has been a good solid business in the past. Eking out a regularly and predictable profit, it became liked by the banks that emerged from the crisis, after the madness of their investment jungles started to fall apart.

I likened it to chickens and lions. For example, when the Independent Banking Commission Report came out in 2011, I noted that ring-fencing was like separating the chickens from the lions:

I see it as like separating the jungle from the farm. The jungle is the investment bank; the farm is the retail bank. The jungle is full of dangerous animals that can kill you; the farm is full of nice things, like chickens and cows, which you control. The jungle is full of risk and excitement and, if you come out the other end intact, you can reap big rewards; the farm is open and easy, with everything under control and reliable results the expectation.

So all the banks wanted to get back to nice boring banking, and production of predictable results from transaction banking has been a big part of that. For example, at SIBOS in 2009 (Hong Kong), I was surprised to see Citi proudly talking about their $1 billion investment in transaction banking during the past year. Surprised as they were one of the big losers in the crisis but, when I asked about it, justified as transaction banking is where the profitability lies.

Six years later, it doesn’t. What’s happening?

Reading between the lines, as I have no official knowledge in this matter, I’m guessing that this big consultancy firm analysed the GTS business and concluded that, in light of the world of today, transaction banking is a long-term loss leader for investment banks. For banks that are not global and have no interest in investment markets, it makes no sense.

This is because the large brokers and market makers need liquidity and liquidity is disappearing fast. What with Basel III’s tightening of leverage along with the introduction of liquidity coverage ratios are making it harder and harder to make a buck. I noted this recently when talking about the future of the City being run by a man and his dog. Even in the areas where money should be made – high frequency trading – liquidity and profit has been disappearing fast.

“As much as two-thirds of all stock trades in the U.S. from 2008 to 2011 were executed by high-frequency firms; today it’s about half. In 2009, high-frequency traders moved about 3.25 billion shares a day. In 2012, it was 1.6 billion a day. Speed traders aren’t just trading fewer shares, they’re making less money on each trade. Average profits have fallen from about a tenth of a penny per share to a twentieth of a penny.”

Why does this make a difference in transaction services? Because with less liquidity and less trade, there’s less settlements and less processing. Banks, as a result, are starting to give away their transaction processing profits to attract liquidity of trading. If you don’t offer investment services, then your now stand-alone transaction services become pointless as they need to be offered for free to compete. It’s not only not making a profit, but a major loss as costs have increased substantially at the same time.

What with the Payment Services Directive (PSD) in its second round asking banks to give away their account information to third parties and SEPA enforced but still to make any return on investment, it’s a challenge. Add on to this a raft of lean and mean and aggressive new players including PayPal, Stripe, Currency Cloud, Transferwise, Klarna and more and you have a problem as, unless you’re a bank with global investment and trade services, there’s no point in having global transaction services. All you need is national servicing.

So, in the case of RBS and its' GTS division, it doesn't make sense to carry on a global business when you are becoming national. After all, transaction banking if managed properly is a profitable, low margin business. If your objective is to create shareholder value, then your low margin business is the first business to be axed. This is sound business logic.

If you add to that the regulatory changes (SEPA, sanction screening, Basel III, risk mitigation) which have increased the costs and the increased competition (all banks and new providers are focused upon this space) has reduced pricing, it’s not a surprise that transaction banking is under pressure. We have seen this in the past with cards acquiring. That doesn’t mean this is a bad development: new companies like Worldpay, Chasepaymentech, Global Collect and Adyen have arisen. Might this happen again, but now for payments? Global Pay? It makes sense, I guess.

And that’s exactly what seems to be happening at RBS. It’s retrenching to become a significant UK Retail and Commercial Bank but, when it comes to overseas, they’re out of there. They’ve sold off Citizens and many other key assets, and are now divesting their investment bank and transaction bank aspirations. It’s not being sold, but just shut down.

Current corporate clients are being told to make plans elsewhere with other banks, whilst any that want servicing by RBS have to deal with them through the NatWest systems in the UK. The large bulk of staff in Amsterdam from the ABN AMRO days are being laid off (about 600 out of around 650) and the whole operation is scaled back.

So one of the world’s top ten banks by market capitalisation, global coverage, assets under management and scale in 2007 is now an itsy-bitsy UK bank and a shadow of its former self. And what was the jewel in the crown of the bank in 2007 – ABN AMRO’s wholesale and transaction banking business – is now buried in the ground.

How times have changed.

[qantas] 08/3/2015 07:47

hxxp://www.techmarketview.com/ukhotviews/archive/2015/03/05/changes-at-the-top-for-gresham


Thursday 05 March 2015
Changes at the top for Gresham

Chris Errington, CEO at Gresham Computing since 2010 and CFO for six years before that, is to step down in June to take a Non-Executive Director role. The CEO role will be filled by Ian Manocha, lately head of the high-growth business portfolio of SAS Institute Inc., the analytics company where he had also been head of the UK and Ireland operation.

Chris together with Ken Archer who moved to Chairman in 2010 and CTO Neil Vernon have made great strides in transforming the company’s prospects. Our HotViews comments since that time have been considerably more upbeat than some of our earlier pronouncements. One from early 2010 recalled Gresham’s massive losses in 2009 and quoted a comment from the 2000 Holway report calling for “a white knight to take [Gresham’s] long-suffering shareholders out of their misery".

Key to the recovery has been the launch and development of the CTC in-memory reconciliation engine which is now used in a multiplicity of use cases in banks, traders and other sectors and has enabled the international expansion of the sales effort into the US and AP. This process has not been without problems, however, as delays in signing contracts took the wind out of the company’s sails (and temporarily halved the share price!) in October 2014, see here. Nevertheless, the potential of the CTC product, coupled with tight control of the legacy business, has led to a quadrupling of the shares since 2010.

The new CEO will be expected to accelerate the growth of the CTC portfolio and to strengthen further the company’s position in the market for financial transaction control systems. He will have a good foundation on which to build with recent statements from the company showing more contract wins and a positive outlook.
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Mr. Ian Manocha has been Vice President of Government for Emea & Ap at SAS Institute, Inc. since April 24, 2012. Mr. Manocha serves as Managing Director SAS UK & Ireland at SAS Software Limited and serves as its member of the SAS EMEA Executive Board. Mr. Manocha joined SAS in 1996 to develop its Manchester sales office, and in 2000 he moved to the SAS UK head office to take up the position of Sales Director. In 2005, his career took on an international dimension when he became responsible for the direction of SAS' financial services business across Europe, the Middle East and Africa In 2007, he moved to Vienna, where as Managing Director of SAS Austria he was responsible for major customers across Central and Eastern Europe. A civil engineer with a military background, he entered the business technology world just under 25 years ago when he joined ICL (now Fujitsu), where he initially worked on government and defence contracts followed by a move into selling into the insurance industry. Mr. Manocha holds a BSc Honours degree in Civil Engineering from Southampton University.

[richjp] 07/3/2015 19:24

Certainly the new CEO seems to have an excellent CV. The only word of caution I would make, is that sometimes people in large companies realise that they have gone as far as they will ever go in those companies, therefore look for a means to get out before they are forced out. I hope that that is not the case here of course. I am pleased to see the existing CEO staying on as a non exec. He will have key relationships with all the existing customers and I am sure that his remaining presence will be reassuring to those customers.

This also clears up the uncertainty following the short stay of Hamish Purdey. He may have moved on for valid reasons but something to me did not sound quite right.

The other factor which could have counted for the positive market reaction is the statement at the end of the RNS that the company is making a “strong CTC-led start to 2015”. Following the profit warning that is very encouraging. The first quarter is usually quiet from a new order perspective for most I T companies, as many potential clients are still finalising their priorities for the year. Possibly the strong start may be due to a greater usage by existing clients and/or the rolling out of CTC within the clients signed last year.

I think we still need to get the definitive bad news for 2014 out of the way when the full results are announced before the share price moves much further, but assuming that bad news is already in the price, this is a good time for a new man to step in. There seems now to be a good CTC client base and the investment in sales force expansion last year may now be poised to produce more significant results.

[schytalk] 05/3/2015 23:14

Good share volumes and yes the market really seems to like the announcement of the new CEO. I have repeatedly said that the current CEO was a weakness - you heard it here first!

I look forwards to further good news and a soaring share price

Onwards and Upwards.

[4-10] 05/3/2015 16:50

Looks like the market likes the new CEO must check him out

[jadeticl3] 05/3/2015 16:26

Well well, movement at last, and in the right direction.

[wh1spa] 05/3/2015 14:06

I have looked through other small cap, tightly held, stocks and they all seem to have five or six on the go. Anyhow it will be interesting to see in the run up to the results if more join in.

[schytalk] 05/3/2015 12:56

Wh1spa

I think that three MM's is pretty good given Gresham is a small cap stock with little volume, most of the shares being 'locked up' with institutions.

[wh1spa] 05/3/2015 12:11

Only three MM's covering this at the moment!

[schytalk] 05/3/2015 11:55

Salpara

As always DYOR but I think if you do not buy in soon then you will miss out, the only way is up for the share price following the board change announcement.

jadeticl3

Yes I am pleased to see the announcement I have been no fan of the CEO (as last of the old guard) but he remains as non executive (I had assumed he would have been moved sideways to COO or whatever) so that is good continuity, something the Gresham board values.

Given the recent EGM and changes to the share option plan (and promise of dividends) this announcement is not a surprise although the exact candidate is of course. As for the man himself time will tell but he does have very good credentials having a sales bias and working with banks in the risk management space. The thing I particularly like is that he has been with SAS since 1996 so this move is a big one for him.

Also very pleased to see the high volume of shares traded today, it will be interesting to see who the buyers are. There has been weakness in the SP, the EGM results showing that some major shareholders were anti and clearly wanted out.

Brilliant news overall in my view.

Onwards and very much Upwards.

[salpara111] 05/3/2015 11:25

Er no!
If I were buying it would be more along the lines of 15K
I am somewhat confused as the huge trades were executed at the mid market price.

[wh1spa] 05/3/2015 09:48

Blimey that was a big stake if you took it!

[salpara111] 05/3/2015 09:39

Have been looking at this for a little while now.
I can only assume that they don't feel like they are gaining enough traction with the CTC product despite a number of new contracts.
The main problem I have is that the current valuation against profits is pretty punchy so another downbeat statement could drive the share price down to 60p again.
I am in two minds about whether I should take a stake or not.

[jadeticl3] 05/3/2015 08:52

I presume, Schytalk, that this mornings news moves you more than it has moved the share price, or even investors to act. There appears to be no more response than to a statement that the companies results will be printed in a new font!

Is this good news for Gresham, or a period of uncertainty?

[schytalk] 26/2/2015 19:05

Quantas

Thanks for the good news re Solo. A signing that is not an RNS and that is positive because it is ordinary business.

Also a Gresham RNS shows that the buyer of 628k shares yesterday was Majedie Asset Management Limited, so they now have 5.5%. Seems that at least one major shareholder sees the current value in the stock and has faith.

Two good news stories in one day yet the share price does not move - time for the brokers to start believing again!

Onwards and Upwards.

[qantas] 26/2/2015 17:45

Solo Capital selects Gresham CTC to automate reconciliation process

hxxp://www.fx-mm.com/39911/news/technology-news/solo-capital-selects-gresham-ctc-to-automate-reconciliation-process/

26 February 2015 • Source: Gresham Computing

Gresham Computing plc, a leading provider of transaction control solutions to international financial institutions and corporates, today announced that Solo Capital Partners LLC, a boutique financial services house based in London has selected Gresham’s Clareti Transaction Control (CTC) solution to enable it to automate and streamline the matching and reconciliation process across its middle and back office operations.

Solo Capital specialises in supplying investment management, securities lending, principal and agency brokering services. It sought an innovative solution that would scale alongside its rapidly growing business. Gresham’s CTC solution will provide Solo Capital with increased flexibility, scalability and control, enabling it to on-board new reconciliations across its different business entities rapidly and cost effectively.

“Solo Capital is widely recognised as an exciting and rapidly expanding financial services house with a highly experienced team, who recognise the benefits that the latest technology can bring as it expands its business,” says Bill Blythe, Global Business Development Director, Gresham Computing. “It’s crucial that rapidly growing firms, such as Solo Capital, have the enterprise-wide controls in place to navigate the ever-changing control landscape. Having CTC in place provides the integrity and real-time certainty that firms simply cannot afford to do without.”

[jadeticl3] 26/2/2015 14:07

Looks like a sell, but today a respectable company is admitting that it bought a sizeable chunk of this company a few days ago. The fact that there was not a flicker northwards in the share price confirms for me that only a new big account will overcome the present inertia. But what do I know?

[4-10] 26/2/2015 08:32

Agreed looks like a sell as do most of the transactions this week.